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THE MVRSFA, TILA, AND FUDTPA

By: Micah Andrews

THE MVRSFA, TILA, AND FUDTPA

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Important Reminders for Complying with the Florida Motor Vehicle Retail Sales Act (Which Will Save You Money!)

Florida law, like most states, includes provisions regulating the sale of motor vehicles when accomplished using a retail installment sales contract (“RISC”).  While contracts used by most dealerships are drafted specifically to comply with these statutes, a dealership is wise to understand the regulations in order to avoid penalties and lawsuits that result from non-compliance.  Consumer lawsuits, in particular, can expose a dealership to thousands of dollars of costs even when the mistakes are fairly innocuous.  Increasingly, consumers who are unsatisfied with their vehicle purchase for unrelated reasons will contact an attorney who instead identifies and files a lawsuit against the dealership based on small mistakes in the disclosure process which violate the MVRSFA.  These violations, if proven, entitle their client to damages and attorney’s fees.  Most other states have similar statutes regarding installment contracts.  For the purposes of this article, we will focus on Florida.

The MVRSFA, TILA, and FUDTPA

Florida’s Motor Vehicle Retail Sales Finance Act (“MVRSFA”) is found in Chapter 520, Sections 520.01 through 520.14, Florida Statutes, and essentially is an adoption of the Federal Truth in Lending Act (“TILA”).  TILA is primarily a law about disclosures.  The regulations make clear what credit terms a dealership must disclose when entering a retail installment contract with a consumer.  Florida’s MVRSFA expressly states that a retail installment contract entered in the state must comply with TILA.  The law is also clear that compliance with these regulations is the dealership’s responsibility, even if the RISC is seamlessly assigned to a third-party financing company.

The credit terms which are required to be “clearly and conspicuously” disclosed include:

  • The creditor’s identity
  • Amount Financed
  • Financing Charge
  • Total Payments required by the RISC
  • Total Sale Price

The MVRSFA further requires that (1) an exact copy of the contract be provided to the consumer; (2) that all credit terms must be completed prior to the signing of the contact; and (3) that fees which are collected by the dealership (as opposed to fees that are paid to a regulatory agency) be expressly disclosed and described as such.  See 520.07, Fla. Stat.  Further, Florida’s Unfair and Deceptive Trade Practices Act (“FUDTPA”) has regulations specifically aimed at the motor vehicle industry. See §501.976, Fla. Stat.  These regulations make it unlawful for a dealer to misrepresent a vehicle’s previous use, mileage, prior damage, or warranty coverage.

Noncompliance Issues

As mentioned above, most dealerships have invested in contracts which have been prepared by sophisticated parties in order to comply with the MVRSFA’s and TILA’s disclosure requirements.  However, problems still arise when dealership staff is not aware of these requirements and skip steps which are necessary under the Act. This often occurs when a dealership provides a consumer with a contract with incomplete terms (i.e. blank spaces in the financing), forgets to have a dealership representative sign the contract, or fails to provide the consumer with a final copy of the agreement.  Claims are also brought under the FUDTPA when a deal jacket fails to include documents indicating prior damage to the vehicle, its delivery to a prior consumer which ultimately fell through, or the proper explanation of small costs like titling or new tire fees.

While these mistakes may seem insignificant (and likely go unnoticed in most cases) they can carry significant monetary consequences if identified by a scrupulous consumer attorney.  Under the MVRSFA, a consumer can bring a lawsuit against a dealership for non-compliance with the act and is entitled to “an amount equal to the finance charge” in the contract. See §520.07(12), Fla. Stat. This amount is often $8,000+ in a typical new vehicle purchase.  The Act also mandates an award of attorney’s fees to a consumer who successfully brings an MVRSFA claim. See §520.07(12), Fla. Stat.   Depending on how much work is required by the consumer’s attorney, these fees can often double or triple the damages the consumer is seeking.

Automobile dealers in Florida and other states should consider putting in place procedures to make sure that retail installment contracts are completed, executed, and provided to consumers in compliance with the MVRSFA and TILA.  Increasing litigation arising from these mistakes can result in significant costs to a dealer.  As is the case in most other areas of business and life, “an ounce of prevention is worth a pound of cure.”  Specific questions about retail installment contracts or execution procedures and their possible State or Federal implications should be directed to your experienced motor vehicle franchise lawyer.