Fairway Dealerships Must Tell Customers if Cars Were Rentals

An Orange County car dealership, hit with charges of deceptive business practices, was ordered by a judge Tuesday to tell its customers explicitly when they are buying used rental vehicles.

That order by Superior Court Judge William F. Rylaarsdam came in response to a civil action brought 6 weeks ago by the district attorney’s office charging that the Fairway dealerships failed to tell car buyers the true histories of their cars--and in some cases told “outright lies.”

Consumer attorneys in the district attorney’s office documented 29 cases in which they say car buyers were duped by Fairway, which runs Toyota and Lincoln-Mercury dealerships in Fullerton, and Ford and Volkswagen dealerships in Placentia.

In those cases, the district attorney’s office charges, Fairway car buyers were led to believe they were buying low-mileage “executive” used cars, demonstration models or one-owner used cars--even though state records showed later that they had in fact bought rentals.

Most of these 29 people, asserting that rentals are not as well maintained as other used cars, said they would not have bought the cars at all--or would have paid significantly less--had they known the truth.

Deputy Dist. Atty. Wendy Brough said she believes the practice--in violation of state consumer protection laws--may be widespread in Orange County. Investigators have targeted at least four other local dealers suspected of similar offenses, carrying a potential fine of $5,000 per case.

Doug Cook, president of Fairway Lincoln Mercury, refused comment on the case after attending the court hearing, referring all questions to firm attorney John C. McGuire.

McGuire, frustrated by Judge Rylaarsdam’s issuance of a preliminary injunction against Fairway, said after the hearing: “I’m really not happy with this. I just don’t think it makes any sense.”

The attorney noted that none of the car buyers cited by the district attorney’s office had complaints about the quality of the cars, and he said the purchase prices were in fact below “blue book” quotations.

“The only complaint these people have is that they weren’t told the true history of the vehicle,” McGuire said. And in many cases, he added, Fairway dealers themselves do not know the histories of cars that they purchase at auction.

But Judge Rylaarsdam was unswayed by that argument. Even if the Fairway dealers did not know that their cars had been used as rentals, he said, they should have.

Finding that the district attorney’s office had made “a strong showing of violation,” Rylaarsdam suggested in court that Fairway dealers “went out of their way” to keep themselves ignorant of the cars’ histories.

Later in the day, Rylaarsdam signed a preliminary injunction that requires Fairway dealers to “conspicuously post a notice on each vehicle” notifying potential buyers that the car was used by a rental agency. Fairway will also have to give buyers written notice to that effect at the time of purchase.

As the case moves toward trial, Fairway may also be subject to fines that could total at least $150,000, said Brough, of the district attorney’s office.

But Fairway attorney McGuire said the judge’s order is a moot point, since the dealership has already instituted a new policy of giving written notice of a car’s history. “There’s no need for this order now,” he said.

Brough, however, countered in an interview: “This injunction keeps the pressure on them. If there is no court order, there’s always the danger that Fairway may lapse into its old ways to the detriment of the consumer.”