Vehicle dealers often come up with creative ways to obtain vehicle financing for consumers. Unfortunately some dealers violate the law when engaging in “creative financing.” Usually, the Retail Installment Contract (RIC) contains valuable information that can assist an attorney in determining whether or not the transaction was legal. The RIC is a valuable tool that can reveal Unlawful Trade Practices Act (UTPA) violations, Truth in Lending Act (TILA) Violations, and violations of the Oregon Administrative Rules. Oregon Law has specific provisions that apply to every vehicle RIC in Oregon.
ORS 83.510(11) defines what an RIC is. Basically the RIC is an agreement entered into in Oregon where the vehicle dealer holds the title to the vehicle or a lien upon a motor vehicle, which is the subject matter of a retail installment sale. Retail installment sales make up the vast majority of vehicle sales in Oregon.
Oregon law specifically prescribes the form and contents of the RIC. Most consumers are provided the long pink piece of paper noting “Retail Installment Contract” on the heading. ORS 83.520 notes a retail installment contract shall be in writing, shall contain all the agreements of the parties, and shall contain identifying information relating to the dealer, purchaser, and vehicle. ORS 83.520 has other statutory mandates, but the most important mandates are found in Section 3.
ORS 83.520(3) (a) mandates the RIC contain the “cash sale price” of the vehicle. The “cash sale price” is defined as the price for which the vehicle dealer would sell to the consumer, and the consumer would buy from the motor vehicle dealer, if the sale were a sale for cash instead of a retail installment contract. The “cash sale price” can include taxes, registration, license fees and other charges for accessories and their instillation, and for vehicle improvements.
ORS 83.520(3) is very important if you are addressing a negative equity issue with the vehicle trade in. The negative equity issue arises if the consumer owes more than the trade-in is worth. (See OAR 137-020-0020(2)(t) and (u) for a more detailed explanation of negative equity.) OAR 137-020-0020(3)(aa) prohibits the vehicle dealer from raising the “cash sale price” of the new vehicle to offset the negative equity in the trade-in. Negative Equity must be disclosed on the RIC. An unlawful negative equity violation may result in a UTPA violation, TILA violation, or other violations.
ORS 83.520(3)(b) requires the RIC to note the amount of the buyer’s down payment, itemizing the amounts, if any, paid or credited in money or in goods and containing a brief description of goods traded in. Violations of this section regularly occur when the dealer is taking in property other than a vehicle as the trade-in. This section should be reviewed if your client has traded in that traded-in item as the down payment. For example, if your client traded in a television and video games to the dealer to be applied to the vehicle down payment, the dealership would violate the law if the dealership listed the traded in items as a $500.00 “cash down payment” on the RIC and failed to itemize the amounts given for the television and video games. Arguably, failing to comply with this section is a violation of ORS 646.608(1)(k), and ORS 646.608(1)(s).
Another often overlooked sub-section is ORS 83.520(3)(j). That subsection mandates the RIC must include a plain and concise statement of the amount in dollars of each installment or future payment to be made by the consumer, the number of installments required, and the date or dates on which or periods in which the installments are due. Dealers sometimes claim to have deferred a down payment that was listed as a “cash down payment” on the RIC. Later the dealer asserts the consumer owes a certain amount of money for the down payment. However there is not anything in writing noting that the down payment is owed, and the documents note that the cash down payment has been made. This section mandates that if there are any future payments the amount and due date must be included in the RIC. Failing to include the deferred down payment in the RIC is likely a violation of ORS 646.608(1)(k) and may be a violation of OAR 137-020-0020(3)(t).
It is important to note, once the transaction is complete the dealer must deliver or mail a copy of the RIC to the purchaser. See ORS 83.540. ORS 83.540 also allows for the consumer to rescind the deal in very limited circumstances.
Lastly, ORS 83.670 notes certain provisions in the RIC are unenforceable. This section prohibits the dealer from enforcing any provision granting the dealer power of attorney or confession of judgment. ORS 83.670 also prohibits the dealer from enforcing a provision in the RIC that allows the dealer or finance company to enter the consumer’s property unlawfully to repossess the vehicle. Vehicle dealers and finance companies also cannot use any provision in the RIC to commit any illegal act to collect payments.
ORS 83.670(5) is the most important sub-section. This section prohibits enforcement of any provision in the RIC, or any document executed in connection with the RIC, that relieves the vehicle dealer from “liability for any legal remedies that the buyer may have had against the motor vehicle dealer under the contract.” ORS 83.670(5). As a result a waiver of rights or hold harmless agreement signed in conjunction with a RIC is unenforceable. Attorneys handling car cases are starting to see more and more waiver of rights forms that prohibit the consumer from exercising legal rights.
Unfortunately, Oregon’s Vehicle RIC laws do not have a specific remedy provision. However, the careful practitioner can rely on these statutes to support various legal theories and allegations. If you find yourself involved in a case with vehicle financing issues, it is imperative you carefully review the RIC and ORS 83.510, et seq.
Jeremiah Ross practices personal injury law and consumer law at Ross Law, LLC.