Protecting Your Dealership: Defending Against Consumer Actions

In Illinois, consumer actions against new and used vehicle dealerships are often brought under the Illinois Consumer Fraud and Deceptive Business Practices Act (the “Act”) codified as 815 ILCS 505. Section 10a of the Act allows individuals to file a lawsuit if they suffer actual damages from unfair or deceptive acts or practices from a new or used vehicle dealership. Section 2 of the Act details the prohibitions against “unfair or deceptive acts or practices.” Many of these actions include but are not limited to:

Misrepresentation: Providing false or misleading information about a vehicle’s condition, history, or features.

Omission of Material Facts: Failing to disclose important information that could affect a consumer’s decision to purchase a vehicle.

Deceptive Advertising: Engaging in false advertising or using bait-and-switch tactics to lure customers.

Unfair Practices: Conduct considered unethical, oppressive, or causes substantial injury to consumers.

If the court favors the consumer, they can be entitled to actual damages, injunctive relief, and attorney's fees and costs. These costs can add up quickly and cause significant financial strain to both family-owned and national dealerships, underscoring the importance of a robust defense strategy.

Defenses for Dealerships in Response to Consumer Actions

Illinois dealerships have numerous options in defense to a consumer action alleging unfair or deceptive acts.

Lack of Causation Defense: Dealers can argue the alleged deceptive act did not cause the consumer’s damages. This defense is based on the Act’s general requirement that the consumer must suffer "actual damage" because of the alleged unfair or deceptive act.

Good Faith Error Defense: Dealers can defend with evidence of good faith. The Act does not apply to actions authorized by law and, therefore, dealers can argue the alleged violation resulted from a good faith error and that reasonable procedures were in place to avoid such errors.

Statute of Limitations Defense: Dealers can assert the consumer is time-barred. This defense is based on Section 10a(e) of the Act, which imposes a three-year statute of limitations for a consumer action.

Protections Under the Illinois Automotive Repair Act

The Illinois Automotive Repair Act (IARA) is designed to protect consumers from fraudulent and deceptive practices in the automotive repair industry. However, it also provides protection for dealerships that operate vigilantly and adhere to its requirements.

By strictly following the provisions of the IARA, dealerships can mitigate risk of potential legal claims while maintaining a positive reputation. Compliance with the IARA involves keeping updated records, disclosing warranties and parts costs, and providing accurate estimates. These practices ensure that dealerships operate within the law, and foster trust and transparency to consumers.

Other Options for Dealerships Aside from Litigation

Litigation, often seen as the last resort for resolving disputes, can be a double-edged sword. The process is not only time-consuming and costly, but it can also potentially damage a dealership's hard-earned reputation and customer relationships.

Mediation, a collaborative process involving a neutral third-party mediator, empowers both the dealership and the consumer to reach a mutually acceptable resolution. Unlike litigation, mediation gives the parties more control over the outcome, allowing dealerships to address consumer grievances directly and preserve business relationships.

Mediation is less formal, typically faster, and less expensive than going to court, offering a more amicable path to resolution.

Arbitration is another alternative dispute resolution method where a neutral arbitrator hears both sides and makes a binding decision. While it shares similarities with litigation, arbitration is usually faster and can be less formal.

Many dealerships include arbitration clauses in their consumer contracts, which can streamline dispute resolution. Take a look at our article on arbitration here.

Lavelle Law can assist dealers in defending against claims brought by consumers. For further questions, please contact attorney Sarah Reusché at sreusche@lavellelaw.com or (847) 705-7555.