The lawsuit, filed in early March, is the result of a two-year investigation of Zangara's two dealerships, Zangara Dodge in Albuquerque and Zangara Chrysler-Jeep-Dodge in Española, that found that the dealerships were violating the state's Unfair Practices Act by overcharging customers on registration fees, and claims that they also charged fictitious title fees. Deputy Attorney General Joel Cruz-Esparza said that such practices could have started as far back as four years ago, and that thousands of customers were likely affected. But Zangara attorney Allan Wainwright protests and said that he believes that the AG's accusations are not only exaggerated, but that they're little more than political payback.
The whole mess started in the fall of 2003, when the AG's office came across what looked like suspicious numbers on contracts they were studying for unrelated complaints toward the dealerships. When they investigated further, they found that the dealerships were overcharging customers upwards of $35 on their registration fees, and that, additionally, they were charging a fee for “title guarantees,” a term which Cruz-Esparza said does not exist. Apparently, the dealerships were charging a flat rate of $100 to all customers for registration, despite the fact that such fees usually top out between $46 and $62. Once the actual registration amount was mailed to the Department of Motor Vehicles (DMV), the dealerships would keep the difference. Not only were they overcharging, they were also leaving their customers unaware that they were paying more than they owed and that the dealerships were benefiting from the remainder.
Zangara responded to these charges by saying that there was “confusion” about what the fees should have been, and assured that it would be corrected. The explanation for this, said Wainwright, is that calculating registration fees was a complex and lengthy process until quite recently, one which could take up to days or even weeks as dealerships waited to hear back from the DMV, who provided them with the final amount. He said that in order to speed up the process of car-buying, they charged a flat rate to all of their customers. Additionally, he said, about half of the time customers were underpaying, as registration fees were totaling over $100. In these cases, the dealerships would lose money, Wainwright said.
Yet, on Carmax.com, where free registration estimates are given online, for the state of New Mexico estimates never exceed $63.50.
Regardless, Wainwright said that this practice was discontinued at the time when the AG's office first contacted the dealerships in the fall of 2003, and that since then they've been using a computer system that allows them to calculate registration fees much faster.
But Cruz-Esparza said that to his knowledge these practices had not stopped by November 2004, which was the last time the AG's office had contact with the dealerships. And Sam Thompson, AG spokesperson, said that she doesn't understand how the dealerships could have had such difficulty calculating the actual registration fees.
“No other dealerships were confused,” she said, citing the fact that her office looked at other dealership contracts for comparison, and that they all charged exactly what the DMV required.
When it comes to “title guarantees,” Wainwright said that the matter is one of semantics. On the dealerships' contracts, the term “title guarantees” is preprinted on the same line as “dealer services and handling” and state tax fees, with all three totaling out at $219.
However, the problem, according to Cruz-Esparza, is that there's no way to tell how much of the final amount is attributed to the strange term, which he said he's never heard of.
“There's no such thing as a title guarantee,” Cruz-Esparza said, arguing that if the dealerships weren't really charging for this fee, the line could have simply been crossed out. By leaving it, the dealerships deceive customers and engage in fraudulent behavior, he said.
But in an interview with the Alibi last week, Wainwright said that this problem has now been taken care of, as of two weeks ago, and that the term is no longer printed on the dealerships' contracts. Additionally, he said that for months now the dealerships have begun the process of sending reimbursement checks out to customers, and that they are now spending long hours going back through old records to determine who qualifies for the refund. Cruz-Esparza said that he is aware of one person who has received a refund check, and that if the dealerships were going through records, it would be surprising, because they had refused to give the AG's office access to them upon request.
In fact, the lawsuit came about because last October the AG's office sent an offer to the dealerships, asking for permission for an auditor to come and look at their records. The dealerships refused, and in November sent a counter-offer proposing that to avoid the time and money that it would take to go through records, as an alternative the dealerships could send coupons to all of its customers for the past four years for oil changes or emissions tests, which Wainwright said would well cover any overcharges.
But the AG's office said that such a compromise was insufficient, and argued that customers deserved to get money back, not coupons. At this point, the attorney general decided that it was time for a lawsuit.
The lawsuit requests that the dealerships pay back all of the customers who were overcharged in the last four years, as well as make restitution for finance charges, fees, interest and delinquency collection charges, and that they pay all court costs. Additionally, it asks that the dealerships pay civil penalties of $5,000 for every willful violation of the Unfair Practices Act.
Still, Wainwright believes that there is more to the lawsuit than protecting consumers from fraud. “We were all shocked and amazed that they elected to file a lawsuit on an issue we were working on, when we were close to a resolution,” he said. “It's just speculation, but I think it might be political.” Wainwright refers to the fact that in the last race for Attorney General, Zangara was both a strong financial and vocal supporter of Democrat Patricia Madrid's opponent, Republican David Iglesias.
Wainwright also hypothesizes that the lawsuit might have something to do with a recent article on spot delivery practices that was printed in the Albuquerque Journal that concerned both Zangara dealerships and the AG's office. “I don't think they like the way it came out,” he said, “because then, three days later, they filed the lawsuit.”
But Cruz-Esparza said that such accusations are ridiculous. “We're not going to file a lawsuit because we're not happy with a report,” he said.
The attorney general's spokesperson also explains why they are filing the lawsuit. “It falls to the office of the attorney general to be responsible to use whatever remedies they have under the Unfair Practices Act to correct business practices that harm New Mexico's consumers, and the lawsuit against Zangara is intended to achieve that,” Thompson said. “This isn't the first lawsuit we've filed.”
As for the future of the case, Wainwright is convinced that the situation will be taken care of before it gets to court. “It's being resolved as we speak,” he said.
But Cruz-Esparza is a little less certain. “They want us to accept what they say; we want the court to look at their records, and let the courts decide.”
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