Certified Pre-Owned Used Vehicle or CPO Fraud

Our Chicago consumer fraud attorneys often represent consumers against automobile and truck manufacturers in certified pre-owned used vehicle (“CPO”) lawsuits. The Manufacturers deny responsibility for their own certification, claim that they are not parties to the certification and seek dismissal of the suits. Remarkably they claim that as a matter of law the certifications don’t come from them and that they don’t need to stand behind them, even though their advertising say that they do.

However, manufacturers are clearly liable for false certifications or false CPO’s as breach of express warranties (which for vehicles designed for consumer use also states a Magnuson-Moss claim) and under the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”).

The CPO programs are not a dealer program. They are manufacturer programs with the manufacturer supervising them and profiting from them. The manufacturer sets all the standards; does the marketing; prepares the program materials and monitors and inspects their dealer’s for compliance with the program. The certification provided by manufacturers are not labeled “a Used Car Dealer Certification”; they are labeled for instance a “GMC Certified Used Car” or “BMW Certified Used Car” on the manufacturers’ CPO website and in the certification program documents provided to consumers

Under a number of court decisions, s manufacturer is liable under the ICFA and for breach of warranty for falsely certifying vehicles that are rebuilt wrecks or flood vehicles and holding them out to buyers as meeting certification requirements. See Garcia v. Overland Bond & Inv. Co., 282 Ill. App. 3d 486, 495-496 (1st Dist. 1996). Under Section 10(a) of the ICFA those persons damaged by violations of the ICFA may sue “any person” who violates the Act. Section 1(c) of the Act includes a “business entity” as a “person.” 815 ILCS 505/1(c); Garcia, 282 Ill. App. 3d at 496; see also Torp v. Gen. Motors Acceptance Corp., No. 05-1042-CV-W-HFS, 2007 WL 2811437, at *9 (W.D. Mo. Sept. 24, 2007) (GMAC could be liable for its participation in the false certification of GM certified used car that was a rebuilt wreck); Ferrari v. Mercedes Benz USA, LLC, 17-CV-00018-YGR, 2017 WL 3115198, at *5 (N.D. Cal. July 21, 2017) (manufacturer liable as principle for false CPO certification); Washington v. William H. Porter, Inc., CV N17C-01-170 EMD, 2017 WL 3098210, at *6 (Del. Super. Ct. July 20, 2017) (consumer stated consumer fraud and breach of warranty claims against GM for false CPO certification). The ICFA simply tracks the common law. Common law fraud allows suing anyone who participates in a fraud as a joint tortfeasor. Garcia, 282 Ill. App. 3d at 496. Manufacturers as the provider of the certification can also be sued for breach of express warranty. Washington v. William H. Porter, Inc., supra.

The certification documents, certification advertising, and certification website where manufacturers list CPO vehicles for sale bear the manufacturers’ name, and trademarks. The manufacturers maintain the right to supervise and direct its dealer agents with respect to the CPO program and provides direction and training to its agents as to every aspect of the CPO program. Manufacturers, not the dealers, create and supply all materials provided to CPO purchasing consumers, as well as instructions, checklists, and training materials used by dealers participating in the CPO program. The dealer merely acts as the manufacturers’ agent in conducting the certification inspection. Consumers aren’t paying a premium for a used car dealer certification.

By failing to stand behind their CPO programs and misstating that they do and omitting to disclose their policy of refusing to make consumers whole, if the CPO vehicle is a rebuilt wreck or flood vehicle, manufacturers can be sued under the ICFA for an unfair practice in addition to claims for breach of warranty and misrepresentations and omissions of material fact. To adequately plead a claim for an unfair practice under the ICFA, the plaintiff must allege (1) an unfair act or practice by defendant, (2) defendant’s intent that plaintiff rely on or be treated unfairly by the act or practice, (3) that the unfair act or practice occurred in the course of conduct involving trade and commerce, and (4) the plaintiff suffered injury as a proximate result. Thompson v. Fajerstein, 2008 WL 4279983, at *4 (N.D. Ill. Sept. 17, 2008). “A plaintiff may allege that conduct is unfair under ICFA without alleging that the conduct is deceptive.” Siegel v. Shell Oil Co., 612 F.3d 932, 934 (7th Cir. 2010); Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002). A practice is unfair if it (1) offends public policy; (2) is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers. Robinson, 775 N.E.2d at 961. A practice does not need to meet all three criteria to be unfair. Id. It “may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” Id.

Claims for unfair practices are also not required to meet Rule 9(b)’s heightened pleading for fraud. “Because neither fraud nor mistake is an element of unfair conduct under Illinois’ Consumer Fraud Act, a cause of action for unfair practices under the Consumer Fraud Act need only meet the notice pleading standard of Rule 8(a), not the particularity requirement in Rule 9(b).” Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir. 2008).

The Illinois Supreme Court in Avery v. State Farm Mutual Auto Insurance Co., 835 N.E.2d 801 (Ill. 2005) held that a plaintiff must allege “something more” than a mere breach of a contract to state an unfair practice claim under the ICFA. An auto-manufacturer’s consistent practice of denying responsibility for its own certifications is that “something more.” Al Maha Trading v. W.S. Darley & Co., 936 F. Supp. 2d 933 (N.D. Ill. 2013).

If you are the victim of certified pre-owned vehicle or CPO fraud or of any type of used car fraud or car dealer fraud, contact one of our experienced Chicago auto-fraud lawyers with offices in Chicago, Elmhurst and Wilmette at 630-333-0333. You can also contact us online. With offices near Oak Brook, Evanston and Chicago we file suits in state and federal courts all over the Chicago area for auto-fraud and CPO fraud claims against used car dealers or manufacturers who provide CPO certifications. We also bring claims for auto-fraud against used car dealers who sell rebuilt wrecks or flood vehicles that are not CPO vehicles when the dealers have misrepresented condition of the used cars or knowingly omitted to disclose that the vehicles are rebuilt wrecks or flood vehicles.

Client Reviews
★★★★★
I was referred to Peter Lubin from someone in the car business to handle a law suit. From the moment I made the appointment Peter and his staff were outstanding. This wasn't an easy case, most lawyers had turned me down. However, Peter took the time to meet with me and review everything. He took on the case, and constantly communicated with me about updates and case information. We beat this non-compete agreement case in record time. I would use him again and recommend him to my closest family and friends. 5 stars is not enough to thank him for his service. Sebastian R.
★★★★★
I worked on two occasions with Peter Lubin and his staff. They took their time with me and discussed each and every item in detail. The group makes you feel like you are part of the family and not just another hourly charge. I recommend Peter to anyone who asks me for a referral. If you are looking for a top notch attorney at a reasonable rate, look no further than Lubin Austermuehle. Kurt A.
★★★★★
Excellent law firm. My case was a complicated arbitration dispute from another state. Was handled with utmost professionalism and decency. Mr. Peter Lubin was able to successfully resolve the case on my behalf and got me a very favorable settlement. Would recommend to anyone looking for a serious law firm. Great staff and great lawyers! Albey L.
★★★★★
I have known Peter Lubin for over 30 years. He has represented me on occasion with sound legal advice. He is a shrewd and tough negotiator leading to positive outcomes and averting prolonged legal hassles in court. He comes from a family with a legal pedigree and deep roots in Chicago's top legal community. You want him on your case. You need him on your opponents case. He won't stop fighting until he wins. Christopher G.
★★★★★
Peter was really nice and helpful when I came to him with an initial question about a non-compete. Would definitely reach out again, recommended to everyone. Johannes B.