If you receive a demand letter, do not ignore it. The best approach is to notify your attorney immediately and avoid responding in writing until you’ve received legal advice. An attorney can evaluate the claims, help you prepare a proper response, and can evaluate the claims and prepare a proper and timely response.
If the customer claims damages or requests repairs, review the sale documents – especially the “as-is” disclosure and any arbitration clauses. Offer reasonable assistance when appropriate (for example, partial compensation or repairs), but ensure any agreement is documented in writing with a signed settlement form to protect your dealership from future claims.
If both parties agree to cancel a sale, it’s important to properly document the transaction. The buyer should sign the appropriate transfer form (such as a 262 form in California), and refunds should be issued by check, not cash, with a note on the reason for refund. This creates a clear record for legal protection.
Dealerships should ensure all sale contracts include arbitration clauses, have clear disclosures, and maintain strong documentation practices. If a complaint arises, respond professionally and gather all relevant paperwork (bill of sale, disclosures, emails). Legal counsel can help you assess risk and prepare a formal response if needed.
Collect all documentation, including Carfax reports, disclosures, and emails. If the customer acknowledged known issues (e.g., recalls) before purchase, this strengthens your defense. Always respond through your attorney to avoid escalating the issue or admitting liability unintentionally.
Stay calm and avoid confrontation. Document all communications and contact your attorney. If the situation becomes hostile, do not engage further – you may contact law enforcement if necessary for safety.
ALG offers a membership program for ongoing legal support. Members receive access to legal document reviews, settlement form templates, compliance assistance, and representation in customer disputes ensuring your dealership always has legal coverage.
First, verify if the vehicle was sold as-is. If it was, the dealership typically isn’t legally required to repair it, though offering partial goodwill repairs can help maintain reputation. If any repair or refund is agreed upon, it must be accompanied by a signed settlement agreement.
Report the incident to your insurance company immediately and document the circumstances (photos, statements, etc.). Avoid making admissions of fault and consult your attorney for next steps. Fraudulent or staged claims are not uncommon – proper documentation protects you.
Use thorough deal jacket reviews, provide customer disclosures in their preferred language, and ensure your contracts contain clear arbitration and warranty clauses. Periodic legal audits and membership consultations with ALG can help maintain compliance and avoid future problems.