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Lawsuit filed against Illinois car dealer over failure to pay off trade-in vehicles

By Nick Rees | Nov 17, 2009

Lisa Madigan (D)

CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan has filed a lawsuit against a South Holland, Ill., auto dealer alleged to have failed to pay off nearly $120,000 in loans on trade-in vehicles.

South Holland Mitsubishi is also alleged to have failed to pay full refunds to consumers who returned newly purchased vehicles after an agreed upon financing plan could not be arranged.

The auto dealer, which allows consumers to take possession of purchased vehicles prior to the finalizing of financing conditions, known as spot deliver in the industry, allegedly fails to obtain loans for consumers. When the consumers attempt to return these spot delivery vehicles, the dealership fails to then fully refund consumers' down payments.

The dealership is also alleged in the lawsuit to fail to pay outstanding loan balances on trade-in vehicles surrendered by consumers when they purchase a new car. Dealerships are required to pay off a loan on trade-in vehicles by the Illinois Consumer Fraud Act within 21 days.

"Auto dealers are required by law to pay off liens on traded-in vehicles," Madigan said. "Unfortunately, this dealership has been taking consumers for a ride."

Madigan's office has received ten complaints against the dealership. The complaints reflect outstanding balances on loans that range from $9,000 to over $23,000. The consumers also remained financially responsible for traded-in vehicles that they no longer possessed because the dealership failed to pay off the the trade-in loans.

As a result of the failure to pay off trade-in loans, some consumers were targeted by creditors to pay off the loans. Other consumers continued to make monthly payments on the traded-in cars. The complaints filed with Madigan's office stated that the consumers' credit ratings suffered as a result.

Madigan's lawsuit seeks a permanent injunction against the dealership as well as restitution for consumers, a $50,000 civil penalty and an additional $50,000 penalty for each violation of the Consumer Fraud Act with intent to defraud.

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