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Want a refund for that used car?

A legislator's proposal would increase protection for consumers who buy new or used vehicles, limiting interest rates and increasing disclosures.

By Gregory A. Patterson, Star Tribune

Last update: December 5, 2006 - 8:17 PM

Car buyers in Minnesota would get stronger consumer protections, similar to those instituted this year in California, under a bill that a legislator said he plans to submit for consideration early next year.

The so-called Car Buyers' Bill of Rights would give used car buyers two days to return their cars for a refund, and set standards to use the term "certified" in marketing used cars.

It would also require disclosure of all additional fees, services and warranties for both new and used vehicle sales as well as cap the interest rate mark-up that dealers can charge beyond a lender's rate. The bill also would require dealers to provide buyers with a copy of the credit report used in making financing arrangements.

Rep. Ron Latz, DFL-St. Louis Park, who has been elected to the Minnesota Senate, said Tuesday he hasn't completed writing the legislation he plans to introduce because he wants to work with car dealers and consumer groups. He doesn't expect partisan rancor from the bill because consumers in all parts of the state and throughout the whole consumer spectrum have had problems with used car purchases.

At a news conference, he cited two consumers who tried to return just-purchased used vehicles; dealers refused to take them back. "What I'm saying here is 'not so fast.' Sometimes car buyers need to get home and sharpen their pencils" before really knowing whether they can afford a vehicle, Latz said.

Billed as the toughest consumer protection law in the nation for car buyers, the California law caps the amount of profit a dealer can make from an auto loan at 2.5 percent of the loan. After years of lawsuits and consumer complaints about hidden and unfair interest rate increases, several automakers' finance arms already have limited such fees.

"Cars are always in the top three of things consumers complain about," said Jean Ann Fox, director of consumer protection for the Washington-based Consumer Federation of America.

Scott Lambert, executive vice president of the Minnesota Auto Dealers Association, said his group needed to know more before taking a position on the proposed legislation. But he said dealers would be concerned about a two-day return policy.

"This is a very regulated process," he said. "There is not a retail transaction in the country that is more regulated."

Still, consumer groups say more protection is needed.

Four years ago, in a settlement with the Minnesota attorney general's office, the Walser Automotive Group agreed to make recordings of sales to buyers of service contracts and other optional products. Officials at the time said they had received hundreds of complaints alleging that the dealership sold contracts without customers' permission or under false pretenses, didn't disclose the full cost and misled customers about what repairs would be covered.

Attorney General Mike Hatch, who led the Walser litigation, said he would have to see the proposed legislation before commenting on it.

Gregory A. Patterson • 612-673-7287 • gpatterson@startribune.com

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