“Introduction to Consumer Law”

““Introduction to Introduction to Consumer Law”Consumer Law”

Coverage

What makes a consumer statute a What makes a consumer statute a consumer statute?consumer statute?

• Requires that individual(s) • Requires that individual(s) entered into the transaction (purchase, entered into the transaction (purchase, loan, lease, etc.) primarily for loan, lease, etc.) primarily for personal, personal, family or householdfamily or household use. use.

• Excludes transactions for • Excludes transactions for commercial usecommercial use

Coverage Joan works for a landscaping service Joan works for a landscaping service

and buys a car to get to and from and buys a car to get to and from work. It is a consumer purchasework. It is a consumer purchase

• • Joan is the sole proprietor Joan is the sole proprietor of Joan’s Landscaping Service and of Joan’s Landscaping Service and purchases a truck primarily for use purchases a truck primarily for use in the business. It is NOT a in the business. It is NOT a consumer purchase.consumer purchase.

Coverage

Most of the statutes referenced here Most of the statutes referenced here also require that the seller / lender also require that the seller / lender be ‘in the business’ of selling or be ‘in the business’ of selling or lending (check each statute to see if lending (check each statute to see if there are particular numeric there are particular numeric requirements), so that transactions requirements), so that transactions between private parties are between private parties are not not coveredcovered

Coverage recap

1) the individual bought (borrowed, 1) the individual bought (borrowed, leased, etc) for personal as opposed leased, etc) for personal as opposed to business useto business use

2) the other party to the 2) the other party to the transaction was ‘in the business’transaction was ‘in the business’

& & 3) the other party must be a 3) the other party must be a

private (non-governmental) partyprivate (non-governmental) party

Consumers Legal Remedies Act, Consumers Legal Remedies Act,

(CLRA) Cal. Civil Code §1750 (CLRA) Cal. Civil Code §1750 et seq.et seq. applies to most ‘consumer applies to most ‘consumer

transactions’ for goods or transactions’ for goods or servicesservices Exclusions: insurance, pure credit Exclusions: insurance, pure credit

(financial instruments?)(financial instruments?)

excludes real property sale excludes real property sale and construction contractsand construction contracts

CLRACLRA enumerates 24 prohibited practices at Cal. Civil Code enumerates 24 prohibited practices at Cal. Civil Code

§1770(a)(1-23). The most generally applicable / §1770(a)(1-23). The most generally applicable / commonly used of which are prohibitions on:commonly used of which are prohibitions on: representing that goods or services representing that goods or services

have . ..characteristics ..[or]. have . ..characteristics ..[or]. benefits .. ..quantities which they do not have . . .. benefits .. ..quantities which they do not have . . .. (a)(5)(a)(5)

advertising goods or services with intent not to advertising goods or services with intent not to sell them as advertised. (a)(9)sell them as advertised. (a)(9)

representing that a transaction confers or involves representing that a transaction confers or involves rights, remedies, or obligations which it does not rights, remedies, or obligations which it does not have or involve, or which are prohibited by law. have or involve, or which are prohibited by law. (a)(14)(a)(14)

CLRA RemediesCLRA Remedies

Civil Code §1780(a) provides Civil Code §1780(a) provides for:for:

• • actual damages*actual damages* • • injunctive reliefinjunctive relief • • restitution (and restitution (and

presumably rescission)presumably rescission) • • punitive damages*punitive damages*

CLRA RemediesCLRA Remedies

a penalty of up to $5,000 if the a penalty of up to $5,000 if the victim was a senior citizen or victim was a senior citizen or disabled person and suffered disabled person and suffered significant economic, physical or significant economic, physical or emotional harmemotional harm

one-way attorney fees provision one-way attorney fees provision

Pro-class action provisionsPro-class action provisions

CLRA Procedures

In order to be eligible for damages, In order to be eligible for damages, the consumer (or her attorney) must the consumer (or her attorney) must send the seller a letter “demanding send the seller a letter “demanding rectification”. The seller has thirty rectification”. The seller has thirty days from receipt of the letter to days from receipt of the letter to make rectification, after which the make rectification, after which the consumer can institute an action for consumer can institute an action for damagesdamages

UNFAIR COMPETITION LAW (UCL)

Cal. Bus. & Prof. Code §17200 et seq. Not just a consumer statute

Three primary ‘wrongs’ ‘Unlawful’

Most useful Any Federal, State, Local Statute, Regulation,

Ordinance, etc.

UCL ‘wrongs’

Fraudulent Likely to mislead a reasonable person

(proof of reliance technically not required but…)

Unfair Last resort; as of this date no settled

test

UCL Standing (Prop 64)

Plaintiffs must show they lost money or property as a result of the unfair competition

UCL Remedies

Restitution

Injunctive relief

Four year statute of limitations

Consumer = Car Cases

Tips: get ALL the documents Dealer docs; lender docs (NOI)• Start from the beginning

Motor Vehicle Motor Vehicle AdvertisingAdvertising

§11713.1(e) provides that “advertised §11713.1(e) provides that “advertised vehicles shall be sold at or below the vehicles shall be sold at or below the advertised total price ... regardless of advertised total price ... regardless of whether the purchaser has knowledge of whether the purchaser has knowledge of the advertised total price”the advertised total price”

Dealers may not sell used vehicles as Dealers may not sell used vehicles as “certified” under many circumstances “certified” under many circumstances (‘as is’ sales, lemons, salvaged, frame (‘as is’ sales, lemons, salvaged, frame damage, etc). Cal. Vehicle Code § damage, etc). Cal. Vehicle Code § 11713.1811713.18

Automobile Sales Finance ActAutomobile Sales Finance Act (‘ASFA’, (‘ASFA’, Civil Code §2981 Civil Code §2981 et seqet seq.; a.k.a ‘Rees-.; a.k.a ‘Rees-

Levering’Levering’)) CoverageCoverage::

must be a ‘consumer transaction’must be a ‘consumer transaction’ only applies to financed sales of motor only applies to financed sales of motor

vehiclesvehicles motor homes are covered, mobile homes motor homes are covered, mobile homes

and trailers are notand trailers are not the seller must arrange or assist in the the seller must arrange or assist in the

financing of the vehicle. financing of the vehicle. if a consumer independently obtains her if a consumer independently obtains her

own financing (such as, by going to her own financing (such as, by going to her credit union), such a loan is NOT coveredcredit union), such a loan is NOT covered

ASFAASFA The most common sale-related violations of the ASFA The most common sale-related violations of the ASFA

stem from the conflicting interests of the dealers and stem from the conflicting interests of the dealers and lender-assignees.lender-assignees.

The lender wants to see thatThe lender wants to see that that the consumer has paid a significant ($2000 or so) that the consumer has paid a significant ($2000 or so)

down paymentdown payment that the primary driver has an acceptable credit scorethat the primary driver has an acceptable credit score ******The dealer tends to be more interested in selling the The dealer tends to be more interested in selling the

contract at all costs. This leads to manipulations of contract at all costs. This leads to manipulations of the down payment figure, disguising co-signers as the down payment figure, disguising co-signers as buyers, and ‘kinking’ credit applicationsbuyers, and ‘kinking’ credit applications

ASFAASFA

Civil Code §2981.9: the One Document Civil Code §2981.9: the One Document RuleRule

““Every conditional sale contract subject Every conditional sale contract subject to this chapter shall . . . contain in a to this chapter shall . . . contain in a single document all of the agreements of single document all of the agreements of the buyer and seller with respect to the the buyer and seller with respect to the total cost and the terms of payment for total cost and the terms of payment for the motor vehicle, including any the motor vehicle, including any promissory notes or any other evidences promissory notes or any other evidences of indebtedness.”of indebtedness.”

ASFAASFA Civil Code §2981.9: the One Document RuleCivil Code §2981.9: the One Document Rule This rule is most commonly violated when This rule is most commonly violated when

the parties make agreements (which may or the parties make agreements (which may or may not be reflected in separate documents) may not be reflected in separate documents) which contradict the terms of the purchase which contradict the terms of the purchase contract. The two forms of ‘extra-contract. The two forms of ‘extra-contractual’ agreements most commonly contractual’ agreements most commonly found are:found are: agreements to allow the consumer to agreements to allow the consumer to

defer all or part of her down paymentdefer all or part of her down payment agreements to trade-in vehicles with agreements to trade-in vehicles with

negative equitynegative equity

ASFAASFA

Deferred Down Payment AgreementsDeferred Down Payment Agreements There is nothing INHERENTLY illegal about There is nothing INHERENTLY illegal about

deferred down payment agreements. deferred down payment agreements. However, when the parties agree to a However, when the parties agree to a

deferred down payment arrangement, but deferred down payment arrangement, but that arrangement is not reflected in the that arrangement is not reflected in the contract (with the down payment being listed contract (with the down payment being listed as ‘cash’), the dealer violates multiple as ‘cash’), the dealer violates multiple sections of the ASFA: CC §2981.9 and CC sections of the ASFA: CC §2981.9 and CC §2982(a)(6)(D).§2982(a)(6)(D). Caselaw Caselaw

ASFAASFA

Deferred down payment agreements can Deferred down payment agreements can be:be: in the form of ‘Hold Check(s) Agreements’in the form of ‘Hold Check(s) Agreements’ separate written agreements or promissory separate written agreements or promissory

notesnotes merely oral agreementsmerely oral agreements in some cases, the consumer provides the in some cases, the consumer provides the

dealer with post-dated checksdealer with post-dated checks

Long story short: ASK about the down payment, Long story short: ASK about the down payment, consumer will not volunteer this informationconsumer will not volunteer this information

ASFAASFA

Remedies for violations of CC Remedies for violations of CC §§2981.9 & 2982(a)(6)(D)§§2981.9 & 2982(a)(6)(D) essentially Rescission: see CC §2983essentially Rescission: see CC §2983

No offset for useNo offset for use attorneys fees and costs: see CC attorneys fees and costs: see CC

§2983.4§2983.4 These cases may be attractive to These cases may be attractive to

private attorneys, depending on private attorneys, depending on other issues in the caseother issues in the case

ASFAASFA

Negative Equity not Disclosed on Face Negative Equity not Disclosed on Face of Contractof Contract occurs when trade-in is ‘under water’occurs when trade-in is ‘under water’ Dealer ‘inflates’ value of trade-in to equal Dealer ‘inflates’ value of trade-in to equal

payoff. Dollar amount of inflation is called payoff. Dollar amount of inflation is called an ‘overallowance’an ‘overallowance’

Dealer does Dealer does notnot take a loss by giving an take a loss by giving an overallowance. Dealer ‘rolls’ overallowance. Dealer ‘rolls’ overallowance amount into purchase priceoverallowance amount into purchase price

ASFAASFA

Overallowances which are rolled Overallowances which are rolled into the purchase price actually into the purchase price actually penalize the consumerpenalize the consumer Increased taxesIncreased taxes Increased license feesIncreased license fees

This Practice violates multiple This Practice violates multiple subsections of the ASFA subsections of the ASFA

Practice also violates TILA (1 year s/o/l)Practice also violates TILA (1 year s/o/l)

ASFAASFA

Remedies for negative equity roll-ins Remedies for negative equity roll-ins not disclosed on face of contractnot disclosed on face of contract essentially Rescission: see CC §2983essentially Rescission: see CC §2983 attorneys fees and costs: see CC attorneys fees and costs: see CC

§2983.4§2983.4 These cases are attractive to private These cases are attractive to private

attorneys.attorneys.

Spot Delivery / Yo-yo Spot Delivery / Yo-yo SalesSales

Refers to delivery of vehicle prior to Refers to delivery of vehicle prior to finance approvalfinance approval

Permitted by contract and statutePermitted by contract and statute Violations stem fromViolations stem from

Misrepresenting consumer’s rights Misrepresenting consumer’s rights when financing does not go throughwhen financing does not go through

TILA violations from back-dating TILA violations from back-dating contractcontract

Spot Delivery / Yo-yo Spot Delivery / Yo-yo SalesSales

Both the standard car contract and the Both the standard car contract and the ASFA (see California Civil Code ASFA (see California Civil Code §2982.5(d)(5)) require that the §2982.5(d)(5)) require that the consumer receive a complete refund if consumer receive a complete refund if financing falls throughfinancing falls through

Representing to the consumer that s/he Representing to the consumer that s/he is obligated to sign a new contract, or is obligated to sign a new contract, or that s/he will lose a portion of payments that s/he will lose a portion of payments already made violates the CLRA already made violates the CLRA

ASFAASFA

Car Buyers Bill of Rights ProvisionsCar Buyers Bill of Rights Provisions Used Car purchasers must be offered an Used Car purchasers must be offered an

optional cancellation option (if under optional cancellation option (if under $40k)$40k)

Consumer has just 2 days to cancel IF Consumer has just 2 days to cancel IF consumer PAYS for the right to cancelconsumer PAYS for the right to cancel

Option to cancel costs $75 to $400, Option to cancel costs $75 to $400, depending upon price of cardepending upon price of car

Actually canceling will cost another $100 Actually canceling will cost another $100 or soor so

ASFAASFA

Car Buyers Bill of Rights ProvisionsCar Buyers Bill of Rights Provisions Anti-packing provision requires Anti-packing provision requires

written disclosure of monthly written disclosure of monthly payment with and without optional payment with and without optional productsproducts

Dealer participation in Finance Dealer participation in Finance Charges capped at 2-2.5 %Charges capped at 2-2.5 %

More car disclosure statutes

The ‘Red Tag’ Law Cal. Veh. Code §11713.26

Dealer must run all used cars through the National Motor Vehicle Title Information System (NMVTIS)

If vehicle shows up as junk, salvaged, or title branded, place a large red tag disclosure in the window

Regardless of NMVTIS output, dealer must make report available to consumers upon request

Buy Here Pay Here Dealers

They assign less than less than 90% of their paper (they carry at least 10% of their sales)

We are left to guess here, but I’d assume if they self-financed your client, they are BHPH

See Cal. Veh. Code

BHPH Laws

Must supply warranty with used car sale Minimum coverage 30 days / 1,000

miles

See Cal. Civil 1795.51

BHPH Laws

Can’t use GPS to track consumer, disable vehicle

Must display Kelley or other ‘recognized’ pricing guide on the window of used car

The Federal Truth in Lending Act The Federal Truth in Lending Act

(TILA), 15 U.S.C. §1601 (TILA), 15 U.S.C. §1601 et seqet seq ‘‘consumer transaction’ requirementconsumer transaction’ requirement applies to most consumer credit transactionsapplies to most consumer credit transactions

virtually all consumer mortgage loansvirtually all consumer mortgage loans other closed-end consumer loans where the loan other closed-end consumer loans where the loan

amount is $50,000 or lessamount is $50,000 or less open-end credit arrangements (credit cards, etc)open-end credit arrangements (credit cards, etc)

idea is to promote the informed use of credit idea is to promote the informed use of credit and promote comparison shopping by and promote comparison shopping by requiring uniform disclosures which must be requiring uniform disclosures which must be provided pre-consummationprovided pre-consummation

Truth in LendingTruth in Lending

Finance ChargeFinance Charge

• • includes not only interest, but any includes not only interest, but any other required charge which is other required charge which is imposed in credit transactions but not imposed in credit transactions but not in cash transactions (see 15 U.S.C. in cash transactions (see 15 U.S.C. §1605(a)). §1605(a)).

example: credit application feeexample: credit application fee


Annual Percentage RateAnnual Percentage Rate • • a measure of how much finance charges a measure of how much finance charges

are paid on a certain loan amount are paid on a certain loan amount (‘amount financed’) over a period of time(‘amount financed’) over a period of time

• • annual percentage rates must be annual percentage rates must be accurate within 1/8 of 1% (.125%) (15 accurate within 1/8 of 1% (.125%) (15 U.S.C. §1606(c))U.S.C. §1606(c))

• • finance charge disclosures must be finance charge disclosures must be accurate within $100 (15 U.S.C. §1605(f)accurate within $100 (15 U.S.C. §1605(f)(1))(1))


Most common TILA violations in car Most common TILA violations in car transactionstransactions Negative equity roll-ins Negative equity roll-ins Back-dating a second or third sales Back-dating a second or third sales

contract in a yo-yo sale to the date of contract in a yo-yo sale to the date of the first contract, which leads to an the first contract, which leads to an over-stated APR. This practices violates over-stated APR. This practices violates TILA if the APR is off by more TILA if the APR is off by more than .125%. than .125%.

Failing to make disclosures ‘available’ Failing to make disclosures ‘available’ pre-sale (tough to prove)pre-sale (tough to prove)


A note about spurious open-end creditA note about spurious open-end credit There are two kinds of disclosures There are two kinds of disclosures

contemplated by TILA: contemplated by TILA: ‘‘closed-end disclosures’, designed for a single closed-end disclosures’, designed for a single

extension of credit, such as a car loanextension of credit, such as a car loan ‘‘open-end disclosures’, designed for a line of credit open-end disclosures’, designed for a line of credit

which will be used many times, such as a credit which will be used many times, such as a credit card agreementcard agreement

Unless the lender can ‘reasonably Unless the lender can ‘reasonably contemplate repeated transactions’, it violates contemplate repeated transactions’, it violates TILA by giving only open-end disclosuresTILA by giving only open-end disclosures


TILA RemediesTILA Remedies (see §1640) (see §1640) • • any actual damagesany actual damages • • a statutory damage amount, a statutory damage amount,

which is capped at (and typically which is capped at (and typically amounts to) $1,000amounts to) $1,000

• • one-way attorneys fees one-way attorneys fees • • specifically provides for class specifically provides for class

actionsactions

Repossessions and Repossessions and DeficienciesDeficiencies

Repo man cannot breach peace Repo man cannot breach peace meaningmeaning No physical confrontationNo physical confrontation Can’t proceed over verbal objectionCan’t proceed over verbal objection Can’t trespass (cut a lock; break into Can’t trespass (cut a lock; break into

garage, etc.)garage, etc.) Citations in materialsCitations in materials

Repo Man’s Duty to Send Repo Man’s Duty to Send Notice re Possessions in Notice re Possessions in

VehicleVehicle Repo men have a duty under Bus. & Prof. Repo men have a duty under Bus. & Prof.

Code §§ 7507.9-.10 to provide notice to the Code §§ 7507.9-.10 to provide notice to the consumers that they have this property consumers that they have this property prior to disposing of it. These notices are prior to disposing of it. These notices are rarely sent. Although there is no private rarely sent. Although there is no private right of action under the B&P Code right of action under the B&P Code sections, consumers could seek sections, consumers could seek compensation through the Unfair compensation through the Unfair Competition Law, Bus. & Prof. Code Competition Law, Bus. & Prof. Code §17200 §17200 et seqet seq. Disposing of the property . Disposing of the property could also constitute a violation of the could also constitute a violation of the Rosenthal Act. Rosenthal Act.

Back to the ASFABack to the ASFA Back to the ASFA: Required Notice of Intent Back to the ASFA: Required Notice of Intent

to Dispose (NOI)to Dispose (NOI) Contrary to many consumers’ Contrary to many consumers’

expectations, there is no requirement of expectations, there is no requirement of notice of any kind prior to repossession. notice of any kind prior to repossession. However, the finance company must provide However, the finance company must provide notice to the consumer of its intent (NOI) to notice to the consumer of its intent (NOI) to dispose (resell) the vehicledispose (resell) the vehicle

• • within 60 days of the repossessionwithin 60 days of the repossession • • at least 15 days prior to resale (20 at least 15 days prior to resale (20

days if the notice is coming from out of state)days if the notice is coming from out of state)

Required Notice of Intent Required Notice of Intent to Dispose (NOI)to Dispose (NOI)

The NOI must contain all the The NOI must contain all the disclosures required by Cal. Civil Code disclosures required by Cal. Civil Code §§2983.2(a)(1-9). Among the §§2983.2(a)(1-9). Among the disclosures required is the consumer’s disclosures required is the consumer’s right to ‘redeem’ by paying the balance right to ‘redeem’ by paying the balance of the loan. of the loan.

Strict complianceStrict compliance is required with is required with these requirements: if the secured these requirements: if the secured creditor fails to strictly comply, it will creditor fails to strictly comply, it will be absolutely barred from collecting be absolutely barred from collecting any deficiency. . any deficiency. .


if the sale was negotiated in a if the sale was negotiated in a language covered by Cal. Civil Code language covered by Cal. Civil Code §1632, the NOI must be in that §1632, the NOI must be in that language. Compliance with this language. Compliance with this requirement is quite low requirement is quite low


Generally, the secured creditor must give the Generally, the secured creditor must give the consumer the right to reinstate. consumer the right to reinstate. EXCEPTIONS followEXCEPTIONS follow the consumer provided false information on the the consumer provided false information on the

credit applicationcredit application in order to avoid repossession, the vehicle was in order to avoid repossession, the vehicle was

concealed or removed from the stateconcealed or removed from the state the consumer has threatened to destroy the the consumer has threatened to destroy the

vehicle, or allowed it to become substantially vehicle, or allowed it to become substantially impaired in valueimpaired in value

the consumer has threatened or assaulted the repo the consumer has threatened or assaulted the repo manman


Generally, the secured creditor must give Generally, the secured creditor must give the consumer the right to reinstate. the consumer the right to reinstate. EXCEPTIONS followEXCEPTIONS follow the consumer has used the car to commit a the consumer has used the car to commit a

crime, or allowed it to be used for criminal crime, or allowed it to be used for criminal purposespurposes

the vehicle has been seized under Federal the vehicle has been seized under Federal drug laws or other statutes that prohibit drug laws or other statutes that prohibit reinstatementreinstatement

the consumer has already reinstated twice, the consumer has already reinstated twice, or reinstated once in the past year (Civil or reinstated once in the past year (Civil Code §2983.3(b))Code §2983.3(b))


Secured creditors violate the ASFA Secured creditors violate the ASFA when they deny the right to when they deny the right to reinstate for any other reason (e.g. reinstate for any other reason (e.g. ‘refusal to make payments’, ‘refusal to make payments’, ‘abandonment of vehicle’). Such an ‘abandonment of vehicle’). Such an improper refusal results in a improper refusal results in a forfeiture of the right to forfeiture of the right to reinstatement, and may give rise to reinstatement, and may give rise to a claim for conversion. . a claim for conversion. .

Cal. Civil Code §1632Cal. Civil Code §1632

Applies to the following types of Applies to the following types of ‘consumer transactions’: ‘consumer transactions’: retail installment sales of goods or retail installment sales of goods or

services to consumers by retail sellers services to consumers by retail sellers (Unruh(Unruh))

transactions covered by the Automobile transactions covered by the Automobile Sales Finance Act Sales Finance Act

transactions covered by the Vehicle transactions covered by the Vehicle Leasing ActLeasing Act

unsecured consumer loansunsecured consumer loans


Applies to the following types of ‘consumer Applies to the following types of ‘consumer transactions’: transactions’: consumer loans secured by something other consumer loans secured by something other

than real propertythan real property leases of dwelling units for longer than one leases of dwelling units for longer than one

monthmonth mortgage loans negotiated by independent mortgage loans negotiated by independent

brokersbrokers attorney fee agreementsattorney fee agreements Reverse mortgages / foreclosure consulting Reverse mortgages / foreclosure consulting

contractscontracts


• • The requirements of §1632 are The requirements of §1632 are triggered if the negotiations were triggered if the negotiations were conducted in one of five languages*conducted in one of five languages* SpanishSpanish VietnameseVietnamese KoreanKorean ChineseChinese TagalogTagalog


In order to trigger §1632's In order to trigger §1632's requirements, the negotiations must requirements, the negotiations must have taken place “primarily” in one of have taken place “primarily” in one of five languagesfive languages no case law on the meaning of ‘primarily’no case law on the meaning of ‘primarily’ If the dealership provides a translator, If the dealership provides a translator,

the negotiations will have been deemed the negotiations will have been deemed to have taken place in the consumer’s to have taken place in the consumer’s languagelanguage


In order to trigger §1632's In order to trigger §1632's requirements, the negotiations must requirements, the negotiations must have taken place “primarily” in one have taken place “primarily” in one of five languagesof five languages minor translator exception (CC minor translator exception (CC

§1632(h))§1632(h)) incompetent translator exception (CC incompetent translator exception (CC

§1632(h))§1632(h))


The primary obligation triggered by 1632 The primary obligation triggered by 1632 is the requirement that the consumer be is the requirement that the consumer be given a translation in his/her language given a translation in his/her language prior toprior to executing the English language executing the English language contract.contract. timing is crucial, but translation timing is crucial, but translation

provided after signing presents proof provided after signing presents proof problemsproblems

Cal. Civil Code §1632Cal. Civil Code §1632 issue regarding ‘Acknowledgement of issue regarding ‘Acknowledgement of

Receipt’Receipt’ Poorly written Spanish text on Poorly written Spanish text on

Acknowledgement reads: “With Acknowledgement reads: “With antecedence of the signature of the copy in antecedence of the signature of the copy in English that was completely filled out English that was completely filled out before our contract or agreement, the client before our contract or agreement, the client acknowledges the receipt of this contract of acknowledges the receipt of this contract of agreement translated to the Spanish agreement translated to the Spanish language, as required by law”. Therefore, language, as required by law”. Therefore, this so-called acknowledgement should not this so-called acknowledgement should not be treated as determinative of the issue. be treated as determinative of the issue.


What documents must be provided What documents must be provided to the consumer?to the consumer? the statute states “the document the statute states “the document

creating the rights and obligations of creating the rights and obligations of the parties and includes any subsequent the parties and includes any subsequent document making substantial changes document making substantial changes in the rights and obligations of the in the rights and obligations of the parties.” See Civil Code §1632(g)parties.” See Civil Code §1632(g)

sales slips, monthly billing statements, sales slips, monthly billing statements, etc. are expressly etc. are expressly excludedexcluded


What documents must be provided What documents must be provided to the consumer?to the consumer? the only case interpreting CC §1632 the only case interpreting CC §1632

held that a Notice of Intent to Dispose held that a Notice of Intent to Dispose of Motor Vehicle is a type of document of Motor Vehicle is a type of document for which a translation must be for which a translation must be provided. provided.

for used cars, a Buyer’s Guide is part of for used cars, a Buyer’s Guide is part of the contract, and therefore a translation the contract, and therefore a translation should also be providedshould also be provided


Does a translation of a form contract Does a translation of a form contract with the prices, interest rates, and with the prices, interest rates, and other sale-specific terms left blank other sale-specific terms left blank satisfy the requirements of the Act?satisfy the requirements of the Act? the answer is pretty clearly ‘no’ - the answer is pretty clearly ‘no’ -

statute amended in 2004 to require “a statute amended in 2004 to require “a translation of every term and condition translation of every term and condition in that contract or agreement”. §1632(i) in that contract or agreement”. §1632(i) regarding ‘retention’ of numerals was regarding ‘retention’ of numerals was also added. also added.


Remedies for Civil Code §1632 casesRemedies for Civil Code §1632 cases:: Rescission (CC §1632(k))Rescission (CC §1632(k)) If the contract provides for attorneys fees If the contract provides for attorneys fees

for the enforcement of the contract (as is for the enforcement of the contract (as is the case in motor vehicle contracts), the case in motor vehicle contracts), attorneys fees will be available under CC attorneys fees will be available under CC §1717§1717

These cases are generally appealing These cases are generally appealing to private consumer attorneysto private consumer attorneys

A VERY BRIEF OVERVIEW OF A VERY BRIEF OVERVIEW OF MOTOR VEHICLE LEASINGMOTOR VEHICLE LEASING

Statutory violations to look out for in Statutory violations to look out for in leasing transactions:leasing transactions:

Representing that the consumer is Representing that the consumer is actually buying in violation of the CLRA actually buying in violation of the CLRA

Representing that leasing is ‘just like Representing that leasing is ‘just like renting’ and that the consumer can return renting’ and that the consumer can return the car at any time. In reality, all leases the car at any time. In reality, all leases provide for harsh early termination provide for harsh early termination penalties. Again, this violates the CLRApenalties. Again, this violates the CLRA

A VERY BRIEF OVERVIEW OF A VERY BRIEF OVERVIEW OF MOTOR VEHICLE LEASINGMOTOR VEHICLE LEASING

The VLA also has a one document The VLA also has a one document rule (CC §2985.8(a)) similar to the rule (CC §2985.8(a)) similar to the ASFA. ASFA.

• • if the vehicle has been if the vehicle has been repossessed, the consumer is repossessed, the consumer is entitled to a notice which complies entitled to a notice which complies with Cal. Civil Code §2987(d)with Cal. Civil Code §2987(d)

CC §1632 applies to leasesCC §1632 applies to leases

A Very Brief Overview of A Very Brief Overview of California Lemon LawCalifornia Lemon Law

Only applies to new consumer goods Only applies to new consumer goods (except BHPH provision)(except BHPH provision)

Covers defects arising during the Covers defects arising during the warranty period which substantially warranty period which substantially impair the use, value or safety of the impair the use, value or safety of the vehiclevehicle

If manufacturer cannot cure the defect If manufacturer cannot cure the defect after a ‘reasonable number of attempts’, after a ‘reasonable number of attempts’, consumer can obtain refund or consumer can obtain refund or replacement vehiclereplacement vehicle


New Motor Vehicle ‘Presumptions’New Motor Vehicle ‘Presumptions’If, in first 18 months or 18,000 miles If, in first 18 months or 18,000 miles

(whichever comes first):(whichever comes first):• • There have been 2+ unsuccessful There have been 2+ unsuccessful attempts to fix a serious safety defectattempts to fix a serious safety defect• • There have been 4+ unsuccessful There have been 4+ unsuccessful attempts to fix any defectattempts to fix any defect• • The vehicle has been in the shop for The vehicle has been in the shop for more than 30 days due to any more than 30 days due to any combination of defectscombination of defects


Always advise consumer to check Always advise consumer to check their owners manual for their owners manual for manufacturer’s address and to write manufacturer’s address and to write to manufacturer directly regarding to manufacturer directly regarding the defectthe defect

These cases are attractive to private These cases are attractive to private attorneysattorneys

Used Vehicle Warranty Used Vehicle Warranty IssuesIssues

A few come with express warrantiesA few come with express warranties Commercial Code IWM exists unless Commercial Code IWM exists unless

properly disclaimedproperly disclaimed Buyers Guide must be usedBuyers Guide must be used If a dealer ‘enters into’ a service If a dealer ‘enters into’ a service

contract or provides an express contract or provides an express warranty, any attempt to disclaim warranty, any attempt to disclaim the IWM is ineffectivethe IWM is ineffective

The Co-signer RulesThe Co-signer Rules

State statute is at Cal. Civil Code State statute is at Cal. Civil Code §1799.90 §1799.90 et seq.et seq.

Applies to most credit contractsApplies to most credit contracts Requires a ‘warning notice’ to any person Requires a ‘warning notice’ to any person

who does not ‘in fact’ receive the goods who does not ‘in fact’ receive the goods or servicesor services

Notice is required to be given to any ‘non-Notice is required to be given to any ‘non-recipient’ any time more than one person recipient’ any time more than one person signs a consumer credit contract (unless signs a consumer credit contract (unless they are husband and wife)they are husband and wife)

The Co-signer RulesThe Co-signer Rules

Failure to provide the notice to the Failure to provide the notice to the co-signer acts as a complete defense co-signer acts as a complete defense for the co-signerfor the co-signer

Problem arises when ‘non-recipient’ Problem arises when ‘non-recipient’ is the is the onlyonly signatory signatory

Federal Trade Regulation Rule is Federal Trade Regulation Rule is similar and similar and arguablyarguably would require would require notice to sole signatory non-notice to sole signatory non-recipient: 16 C.F.R. §444 recipient: 16 C.F.R. §444 et seq.et seq.

Door to Door SalesDoor to Door Sales

Three Day Right to Cancel Notice?Three Day Right to Cancel Notice? Cal. Home Solicitation Sales Act: Cal. Cal. Home Solicitation Sales Act: Cal.

Civil Code §1689.5 Civil Code §1689.5 et seq.et seq. People v. ToomeyPeople v. Toomey says telephone sales are says telephone sales are

covered. covered. 157 Cal.App.3d 1 (1984)157 Cal.App.3d 1 (1984) See also See also Travelers Ins. Co. v.

Workmen's Comp. App. Bd. (1967) 68 Cal.2d 7, 14

ONGOING RIGHT TO CANCEL UNTIL ONGOING RIGHT TO CANCEL UNTIL DISCLOSURES ARE DELIVEREDDISCLOSURES ARE DELIVERED

Seminar Sale?Seminar Sale?

Gives consumers purchasing Gives consumers purchasing “goods” or “services” the right to “goods” or “services” the right to cancel until three days after cancel until three days after receiving compliant cancellation receiving compliant cancellation noticenotice

““seminar setting” = premises other seminar setting” = premises other than buyer’s residence (??) than buyer’s residence (??) (§1689.24(b))(§1689.24(b))

Cal. Civil Code §1689.20 Cal. Civil Code §1689.20 et seq.et seq.

Debt Collection DefenseDebt Collection Defense

LRS Modest Means Panel a great LRS Modest Means Panel a great referral for BK issues: (408) 971-referral for BK issues: (408) 971-68226822

Does your client need BK?Does your client need BK?

• • consumer defense?consumer defense?

• • statute of limitations defense?statute of limitations defense?

• • is your client Judgment Proof (JP)?is your client Judgment Proof (JP)?

Debt Collection DefenseDebt Collection Defense

Your client is probably JP if s/he is:Your client is probably JP if s/he is: a person not likely to re-enter the workforce, due a person not likely to re-enter the workforce, due

to age or disabilityto age or disability who rents (owns no real property)who rents (owns no real property) whose bank account, if any, gets direct deposit whose bank account, if any, gets direct deposit

from a source listed above, and whose balance is from a source listed above, and whose balance is within the limits stated in the materials (e.g. within the limits stated in the materials (e.g. Social Security for one person = $2,425)Social Security for one person = $2,425)

Such a person has no real need to file for Such a person has no real need to file for Bankruptcy, and can deal with harassment by Bankruptcy, and can deal with harassment by creditors and debt collectors by sending one of the creditors and debt collectors by sending one of the ‘judgment-proof / no contact’ letters in the materials.‘judgment-proof / no contact’ letters in the materials.

Law Governing Debt Law Governing Debt SettlementSettlement

FTC Telemarketing Sales Rule 16 FTC Telemarketing Sales Rule 16 CFR 310CFR 310 Call could be inbound or outbound, but Call could be inbound or outbound, but

do need a calldo need a call

No fee prior to settlement §310.4(a)(5)No fee prior to settlement §310.4(a)(5)(1)(1)

No private right of action but….No private right of action but….

Federal FDCPAFederal FDCPA

Covers the following types of ‘debt Covers the following types of ‘debt collectors’, so long as they ‘regularly’ collectors’, so long as they ‘regularly’ collect debtscollect debts

• • collection agenciescollection agencies

• • attorney collectors (including attorney collectors (including attorneys engaged in litigation activity)attorneys engaged in litigation activity)

The Act does The Act does notnot cover original creditors cover original creditors or those acquiring obligation before or those acquiring obligation before defaultdefault


Covers most ‘consumer debts’Covers most ‘consumer debts’ No ‘credit’ requirement: NSF checks No ‘credit’ requirement: NSF checks

coveredcovered Must be ‘money’ debt; mere enforcement Must be ‘money’ debt; mere enforcement

of security interest not coveredof security interest not covered Consensual transaction requirementConsensual transaction requirement

Excludes shoplifting obligations, signal Excludes shoplifting obligations, signal piracy obligations, towing company debts, piracy obligations, towing company debts, etc.etc.


The ‘g’ or ‘validation’ noticeThe ‘g’ or ‘validation’ notice

Within five days of the initial Within five days of the initial communication with the consumer (in communication with the consumer (in practice, always the first letter), the debt practice, always the first letter), the debt collector must send a notice with five collector must send a notice with five disclosures:disclosures: 1) the amount of the debt1) the amount of the debt

• • must state the exact amount as of the date of the must state the exact amount as of the date of the notice; FDCPA is violated if the consumer cannot notice; FDCPA is violated if the consumer cannot determine the amount without calling the debt determine the amount without calling the debt collector collector

2) the name of the creditor2) the name of the creditor

Federal FDCPAFederal FDCPA 3) a statement that unless the consumer, within 3) a statement that unless the consumer, within

thirty days thirty days after receiptafter receipt of the notice, disputes the of the notice, disputes the validity of the debt, validity of the debt, or any portion thereofor any portion thereof, the debt , the debt will be assumed to be valid by the debt collectorwill be assumed to be valid by the debt collector

• • this disclosure must be complete. For this disclosure must be complete. For instance, omission of either italicized phrase will instance, omission of either italicized phrase will lead to liability . lead to liability . demands for payment in a period of less than 30 days, or demands for payment in a period of less than 30 days, or

threats to take adverse action [such as litigation or negative threats to take adverse action [such as litigation or negative credit reporting] within a period of less than 30 days, credit reporting] within a period of less than 30 days, violate this section by ‘overshadowing/contradicting’ the violate this section by ‘overshadowing/contradicting’ the disclosure, unless the debt collector provides additional disclosure, unless the debt collector provides additional information about the consumer’s g(b) rights so that even information about the consumer’s g(b) rights so that even the ‘least sophisticated consumer’ would not be confused the ‘least sophisticated consumer’ would not be confused about their rights to dispute the debt and cease collection about their rights to dispute the debt and cease collection activity activity

Federal FDCPAFederal FDCPA 4) a statement that if the consumer notifies the debt 4) a statement that if the consumer notifies the debt

collector in writing within the thirty-day period that the collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment* will obtain verification of the debt or a copy of a judgment* against the consumer and a copy of such verification or against the consumer and a copy of such verification or judgment* will be mailed to the consumer by the debt judgment* will be mailed to the consumer by the debt collector; andcollector; and

5) a statement that, upon the consumer's written 5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will request within the thirty-day period, the debt collector will provide the consumer with the name and address of the provide the consumer with the name and address of the original creditor, if different from the current creditor.original creditor, if different from the current creditor.**

* * the debt collector need not make reference to a the debt collector need not make reference to a judgment if there is no judgment. The debt collector need judgment if there is no judgment. The debt collector need not make the g(5) disclosure if the creditor listed in the not make the g(5) disclosure if the creditor listed in the g(2) disclosure is the original creditorg(2) disclosure is the original creditor

Federal FDCPAFederal FDCPA A consumer’s dispute in response to the A consumer’s dispute in response to the

validation noticevalidation notice Although the consumer’s rights under Although the consumer’s rights under

§g(b) need not be disclosed, they are important. §g(b) need not be disclosed, they are important. If a consumer sends a dispute within the 30 If a consumer sends a dispute within the 30 day period, the debt collector must cease day period, the debt collector must cease allall collection activity (including litigation and collection activity (including litigation and credit reporting activity) until it responds with credit reporting activity) until it responds with the requested validation. The ‘validation’ the requested validation. The ‘validation’ furnished by the debt collector should be furnished by the debt collector should be responsive to the nature of the dispute.responsive to the nature of the dispute.

A debt collector need not cease collection A debt collector need not cease collection activity in response to a dispute sent after the activity in response to a dispute sent after the 30 day period. 30 day period.


The ‘mini-Miranda’: §e(11)The ‘mini-Miranda’: §e(11) In the first letter the debt collector In the first letter the debt collector

must state “This is an attempt to collect must state “This is an attempt to collect a debt, and any information will be used a debt, and any information will be used for that purpose.” In future for that purpose.” In future communications, the collector must communications, the collector must identify itself as a ‘debt collector’, identify itself as a ‘debt collector’, although case law suggests that the although case law suggests that the disclosure can be omitted it that fact is disclosure can be omitted it that fact is obvious. obvious.


Selected common violationsSelected common violations telephone harassment in violation of telephone harassment in violation of

§1692d (but often difficult to prove)§1692d (but often difficult to prove) §1692d prohibits any act, the natural §1692d prohibits any act, the natural

consequence of which is to harass, consequence of which is to harass, oppress, or abuse the consumeroppress, or abuse the consumer


Selected common violationsSelected common violations discussing the fact that a consumer discussing the fact that a consumer

owes a debt with anyone other than the owes a debt with anyone other than the consumer or the consumer’s spouse. consumer or the consumer’s spouse. While debt collectors are permitted to While debt collectors are permitted to contact third parties to learn the contact third parties to learn the consumer’s residence or workplace consumer’s residence or workplace contact information, they are not contact information, they are not permitted to discuss anything more permitted to discuss anything more with those persons. See 15 USC §§ with those persons. See 15 USC §§ 1692a(7), b, c(b).1692a(7), b, c(b).


Selected common violationsSelected common violations

• • contacting the consumer at contacting the consumer at work after the consumer has indicated work after the consumer has indicated it is inconvenient to receive calls at it is inconvenient to receive calls at the workplace, in violation of §c(a)(1)the workplace, in violation of §c(a)(1)

• • contacting the consumer after the contacting the consumer after the consumer has sent a letter directing consumer has sent a letter directing the collector to cease communications the collector to cease communications in violation of §c(c). in violation of §c(c).

Federal FDCPAFederal FDCPA demands for fees not provided for by demands for fees not provided for by

statute or contract §f(1)statute or contract §f(1)

false threats of litigation in violation of false threats of litigation in violation of §e(5)§e(5)

Any statement which is either objectively Any statement which is either objectively false, or deceptive to the least false, or deceptive to the least sophisticated consumersophisticated consumer

California Rosenthal ActCalifornia Rosenthal Act

Covers the following types of ‘debt Covers the following types of ‘debt collectors’, so long as they collectors’, so long as they ‘regularly’ collect debts‘regularly’ collect debts

• • collection agenciescollection agencies

• • original creditorsoriginal creditors

• • repo men (enforcers of security repo men (enforcers of security interests)interests)

The Act does The Act does notnot cover Attorneys cover Attorneys

California Rosenthal ActCalifornia Rosenthal Act

The Rosenthal Act covers only those The Rosenthal Act covers only those debts arising from ‘consumer credit debts arising from ‘consumer credit transactions’transactions’ The consumer must have received The consumer must have received

something without paying for itsomething without paying for it The term ‘debt’ includes ‘property… The term ‘debt’ includes ‘property…

which is ..owing’which is ..owing’

Rosenthal ActRosenthal Act

While the Rosenthal Act does have While the Rosenthal Act does have its own list of prohibitions, none are its own list of prohibitions, none are more stringent than the FDCPA’s. more stringent than the FDCPA’s.

With the following exceptions, any With the following exceptions, any violation of the FDCPA is a violation violation of the FDCPA is a violation of the Rosenthal Actof the Rosenthal Act A creditor need not comply with §1692gA creditor need not comply with §1692g A creditor need not comply with A creditor need not comply with

§1692e(11)§1692e(11)

New State Disclosure New State Disclosure RequirementRequirement

Effective July 1, 2004, a new statute Effective July 1, 2004, a new statute requires a six sentence disclosure of requires a six sentence disclosure of consumers right under Federal and consumers right under Federal and California debt collection statutes (see California debt collection statutes (see materials for text) materials for text)

If a debt collector’s initial oral contact is If a debt collector’s initial oral contact is in a language other than English, the in a language other than English, the debt collector must provide the notice debt collector must provide the notice again in the consumer’s language. again in the consumer’s language. Violations are treated as violations of Violations are treated as violations of the Rosenthal Act. the Rosenthal Act.

Remedies under FDCPA & Remedies under FDCPA & RosenthalRosenthal

Actual damagesActual damages One-way attorneys fees provisionOne-way attorneys fees provision Statutory damages of between $1,000 Statutory damages of between $1,000

- $3,000, depending on whether you - $3,000, depending on whether you have violations of just one Act or of have violations of just one Act or of both (see Civil Code §§1788.17, both (see Civil Code §§1788.17, 1788.30 and 15 U.S.C. §1692k(a)(2)1788.30 and 15 U.S.C. §1692k(a)(2)(A)(A)

Class actions expressly provided forClass actions expressly provided for

CREDIT REPORTING CREDIT REPORTING ISSUESISSUES

Generally governed by the Federal Fair Credit Generally governed by the Federal Fair Credit Reporting Act, 15 U.S.C. §1681 Reporting Act, 15 U.S.C. §1681 et seq.et seq. (FCRA), which (FCRA), which preempts most state law. preempts most state law.

The FCRA imposes obligations on three sets of The FCRA imposes obligations on three sets of persons: persons: credit reporting agenciescredit reporting agencies - (a.k.a CRAs or - (a.k.a CRAs or

‘bureaus’), the entities that compile consumers ‘bureaus’), the entities that compile consumers credit histories for sale to third partiescredit histories for sale to third parties

furnishersfurnishers - the entities that provide the CRAs - the entities that provide the CRAs with consumers’ payment and credit historieswith consumers’ payment and credit histories

usersusers - the entities that obtain consumer credit - the entities that obtain consumer credit files from the CRAs in order to make a decision files from the CRAs in order to make a decision regarding the consumers’ credit worthiness. regarding the consumers’ credit worthiness.

Federal FCRAFederal FCRA

Obligations placed on usersObligations placed on users No credit report may be ‘pulled’ without No credit report may be ‘pulled’ without

a permissible purpose (see 15 U.S.C. a permissible purpose (see 15 U.S.C. §1681b(a)). The most common permissible §1681b(a)). The most common permissible purposes are in connection with a consumer purposes are in connection with a consumer credit or employment applications, or in credit or employment applications, or in connection with the collection of a debt.connection with the collection of a debt.

Users must also provide consumers with Users must also provide consumers with information about the existence of negative information about the existence of negative information in their credit reports after having information in their credit reports after having taken an ‘adverse action’. See §1681m(a).taken an ‘adverse action’. See §1681m(a).


Obligations placed on furnishersObligations placed on furnishers Numerous obligations to ensure Numerous obligations to ensure

the furnishing of accurate information the furnishing of accurate information (see 15 U.S.C. §1681s-2). However, a (see 15 U.S.C. §1681s-2). However, a consumer only has a private right of consumer only has a private right of action under §1681s-2(b), which action under §1681s-2(b), which arises when a furnisher unreasonably arises when a furnisher unreasonably verifies inaccurate information after a verifies inaccurate information after a consumer has submitted a dispute to consumer has submitted a dispute to a credit reporting agency. a credit reporting agency.


Obligations placed on Credit Reporting Obligations placed on Credit Reporting AgenciesAgencies

CRAs are required to adapt CRAs are required to adapt procedures to ensure maximum procedures to ensure maximum possible accuracy, even absent a possible accuracy, even absent a dispute. See §1681e(b). However, most dispute. See §1681e(b). However, most litigation against CRAs is based on their litigation against CRAs is based on their unreasonable failure to delete or unreasonable failure to delete or modify negative credit information in modify negative credit information in response to a consumer dispute. See response to a consumer dispute. See §1681i. §1681i.

Federal FCRAFederal FCRA Remedies under the FCRARemedies under the FCRA Consumers are entitled to actual Consumers are entitled to actual

damages and attorneys fees in a case damages and attorneys fees in a case involving negligent noncompliance. §1681o. involving negligent noncompliance. §1681o. Consumers can also collect punitive damages Consumers can also collect punitive damages for willful noncompliance. §1681n(a)(2). for willful noncompliance. §1681n(a)(2).

These cases are attractive to private These cases are attractive to private attorneys attorneys only ifonly if the potential defendants the potential defendants have been put on notice of the error by way have been put on notice of the error by way of a cogent dispute letterof a cogent dispute letter

See materials for sample dispute letterSee materials for sample dispute letter

Identity TheftIdentity Theft

Use FTC Fraud AffidavitUse FTC Fraud Affidavit

Send ‘claimants’ Affidavit and letter Send ‘claimants’ Affidavit and letter in materialsin materials

Cal. Civil Code §1798.92 has Cal. Civil Code §1798.92 has excellent remedies including a civil excellent remedies including a civil penalty of up to $30,000penalty of up to $30,000

Identity TheftIdentity Theft

Prevention: See FTC websitePrevention: See FTC website http://www.consumer.ftc.gov/articles/pd

f-0014-identity-theft.pdf Check big three credit reports annually Check big three credit reports annually

at www.annualcreditreport.comat www.annualcreditreport.com

Reporting: Reporting: Local police Local police U.S. Secret ServiceU.S. Secret Service

Unruh Retail Installment Unruh Retail Installment Sales Act (RISA)Sales Act (RISA)

Civil Code §1801 Civil Code §1801 et seqet seq Applies to contracts for consumer Applies to contracts for consumer

goods or services payable in goods or services payable in installments ifinstallments if

There is a finance charge; orThere is a finance charge; or There is a discount available for cash; orThere is a discount available for cash; or Is payable in more than four Is payable in more than four

installmentsinstallments

RISARISA

Most consumer goods are covered Most consumer goods are covered (but autos are not)(but autos are not)

Most consumer services are coveredMost consumer services are covered Some professional services are Some professional services are

exemptedexempted

RISARISA

Extensive disclosure requirementsExtensive disclosure requirements Limitations on finance charges and Limitations on finance charges and

late feeslate fees RemediesRemedies

Contract unenforceableContract unenforceable Attorneys feesAttorneys fees Treble damages for willful violationsTreble damages for willful violations

RISARISA

These contracts are no longer used These contracts are no longer used at most retail establishments; credit at most retail establishments; credit cards have taken overcards have taken over

These contracts tend to be seen in These contracts tend to be seen in the following contexts:the following contexts: Door – to – door salesDoor – to – door sales Gym membership contracts (see also Gym membership contracts (see also

the Health Studio Services Act)the Health Studio Services Act)

Use of Incentive to Get Use of Incentive to Get Consumer to Visit Location, Consumer to Visit Location,

Contact Sales AgentContact Sales Agent Most commonly seen in the timeshare Most commonly seen in the timeshare

or ‘vacation membership’ contextor ‘vacation membership’ context Cal. Bus. & Prof. Code §17537.1 Cal. Bus. & Prof. Code §17537.1 et et

seq. seq. requires extensive disclosures requires extensive disclosures ‘pre-contact’ regarding‘pre-contact’ regarding The fact that there will be a sales The fact that there will be a sales

presentation and approximate lengthpresentation and approximate length Odds of receiving particular incentivesOdds of receiving particular incentives Restrictions on incentivesRestrictions on incentives

Use of Incentive to Get Use of Incentive to Get Consumer to Visit Location, Consumer to Visit Location,

Contact Sales AgentContact Sales Agent Disclosures must be conspicuousDisclosures must be conspicuous Local sellers do not complyLocal sellers do not comply Remedies include treble damages (?)Remedies include treble damages (?) Local sellers will rescind in response Local sellers will rescind in response

to a demand letter pointing out the to a demand letter pointing out the violationviolation

“Introduction to Consumer Law”

Documents

consumer transactions

consumer lawcoveragewhat

consumer purchase joan

local statute

transaction purchase

seller lender

business use2

civil code 1770a1