SPRINGFIELD, Ill. (Legal Newsline) - Illinois Attorney General Lisa Madigan announced on Monday that state lawmakers have passed legislation to protect consumers from paying for traded-in vehicles after a dealership shuts down.
The Illinois House of Representatives voted 91-19 to send HB 880, which creates a trust fund paid into by Illinois auto dealers, to the state Senate. The measure, which was crafted by Madigan, state Rep. Marlow Colvin (D-Chicago) and Illinois auto dealers, is aimed at preventing the hardships many Illinois car owners have faced when some dealerships have closed across the state.
"This bill would create a trust fund to ensure that when a dealership closes a financial burden does not fall to the consumer, who we have seen time and again get stuck with the cost of both their trade-in and their new vehicle," Madigan said.
The bill would require that dealers pay $500 annually into the statewide Dealer Recovery Trust Fund to pay off trade-ins when a dealership closes. Madigan alleges that at least 60 Illinois dealerships have closed and failed to pay off vehicles that have been traded in since 2000.
Dozens of consumers were then faced with the costs of traded-in vehicles, Madigan alleges. Lien holders, as a result of the traded-in vehicles not being paid off, have sought payments from consumers and instituted collections against them, she says.
"I applaud my fellow House members for their support of this important consumer protection measure," Colvin said. "This bill would ensure dealerships in Illinois share in the responsibility in making sure the cost of a traded-in vehicle does not shift to the consumer in the event a fellow dealership has to shut its doors."