The California Consumer Legal Remedies Act (CLRA) is a law that protects consumers from fraudulent or unfair business practices. It prohibits car dealerships from using deceptive and misleading tactics and representations in the sale of motor vehicles, as well as imposing certain duties on car dealerships, such as providing accurate information about car warranties, condition and prior history, and prior repairs to consumers.

Car dealerships are not the only entities subject to CLRA compliance. Finance companies can also be held liable for car dealership violations, including failure to properly disclose the prior history and/or condition of the vehicle they are selling. When car dealerships fail to comply with the provisions of the CLRA, customers who have been misled or unfairly treated by car dealerships may pursue legal action against the car dealerships and their associated financial institutions. In some cases, car dealerships may not always be able to pay the full amount of a customer’s damages, or may even go out of business, making it necessary for the holder of the contract to provide some or all of the compensation.

This is why it’s essential that car dealerships and finance companies remain vigilant in adhering to the provisions of the CLRA, taking proactive measures to prevent violations and using a strong disclosure and compliance software. Doing so could minimize the risk of car dealership lawsuits and help ensure a positive car-buying experience for all parties.