Legal Obligations to Disclose Prior Vehicle Damage to Customers

In Ohio, auto dealers are not permitted to use unfair, deceptive or unconscionable practices in connection with the sale of an automobile. It, therefore, goes without saying that dealers cannot make misrepresentations to their customers about the condition of their vehicles when attempting to make a sale.  As part of this obligation, dealers are required to affirmatively disclose prior vehicle damage and/or repairs to customers during the sales process. Such necessary disclosures include, but are not limited to:

Prior to obtaining a signature from the customer on any document related to the purchase of the vehicle, the dealer must disclose any defect and/or the extent of any previous damage to the vehicle, particularly if the retail repair cost exceeds or exceeded six percent of the manufacturer’s suggested retail price. This excludes damage to glass, tires and bumpers that were replaced by identical manufacturer’s original equipment. Notably, the above disclosure is required only when the dealer has actual knowledge of the defect and/or damage and the vehicle is a new motor vehicle. OAC 109:4-3-16(B)(14). Two hands shaking with a car and money in the background

Prior to the sale of a vehicle, the dealer must disclose any known previous frame/structural damage to the vehicle to the customer.

Prior to obtaining a signature from the customer on any document related to the purchase of the vehicle, the dealer must disclose the fact that such vehicle was previously titled as a salvage vehicle if the dealer has actual knowledge of such fact. OAC 109:4-3-16(B)(29). Failure to disclose a “salvage title” is an Ohio Consumer Sales Practices Act (“CSPA”) violation and the customer may later demand a recession of the sales contract and a return of the purchase price. R.C. 4505.181(B)(2).

Any other obvious defects in a vehicle must be disclosed at the time of sale. See, e.g., Muench v. Eagle Savings Assn. & Hassan Motors, Inc. C.P. Hamilton, Case No. A 850744 (March 30, 1987).

The dealer must also immediately notify the consumer of any additional or substituted equipment, features and/or service which has come to the dealer’s attention at the time of or after the sale, and afford the consumer an opportunity to rescind the purchase agreement. OAC 109:4-3-16(B)(28).

The above disclosures are required whether the damage occurred before the dealer came into possession of the vehicle. Though there is no requirement that the dealer make these disclosures in writing, it is a best practice to do so, and then have the customer sign off on them. This is because the signed, written disclosures may be essential in the event that a customer calls the disclosures into question at a later date.

Note, however, that certain exceptions apply to these general disclosure rules. The most significant of these exceptions is that if the primary purpose of the vehicle was not personal use (i.e., for business purposes), then neither the Ohio Advertisement and Sale of Motor Vehicles Rules (“OAC”) nor the CSPA apply.

Even though there are exclusions, the scope of the disclosure rules is still quite extensive. To ensure that all necessary disclosures are being made, it is recommended that the dealer speak with an attorney with experience in consumer law. The dealership should then ensure that making necessary disclosures becomes part of its regular business practice if it is not already. Otherwise, the dealer may find itself faced with complaints with the Ohio Attorney General or a lawsuit for deceptive sales practices, which is something all dealerships certainly want to avoid.