AG Curtis Hill Warns Hoosiers To Take ‘Buyer Beware’ Approach When Doing Business With Used Car Dealers

Two recent cases resolved by the Office of the Attorney General (OAG) serve as timely reminders to all Hoosiers to exercise extreme caution when purchasing used vehicles. In both scenarios, used car dealers failed to deliver titles and/or provide promised warranties to customers who paid for vehicles.

In Delaware County, Capitol Motors LLC failed to procure warranties for 185 consumers. The business — owned and operated by Naim Mahmoud — advertised that each vehicle it sold came with a 3 month/3,000 mile warranty. Upon selling vehicles, however, the business regularly failed to forward payments to a third-party warranty provider, leaving buyers without warranty coverage. In addition, Capitol Motors failed to deliver valid vehicle titles within 31 days from the date of sale to 22 consumers, leaving those consumers unable to register or legally drive their newly-purchased cars and trucks.

Following a complaint filed against Capitol Motors and Naim Mahmoud by the Office of the Attorney General, a Delaware County Circuit Court judge on March 27 ordered restitution totaling $62,480 for 185 consumers who purchased extended vehicle warranties that they never received. The judgment also provides court-ordered titles for two consumers. The judgment requires the defendants to pay civil penalties of $180,500. The defendants are also ordered to pay the state $450 in costs, producing a total judgment amount of $243,430. Finally, the judgment prohibits defendant Naim Mahmoud from owning, operating or managing another auto dealership in Indiana in the future.

A similar case occurred in Allen County. Shaver Motors of Allen County, Inc., and its owner, John B. Shaver, III, accepted payment from 35 consumers for vehicle service contracts – i.e., warranties – and failed to forward the customers’ money to the warranty provider. This left consumers without the warranty coverage for which they paid. Additionally, Shaver Motors failed to provide titles to multiple customers.

Following a complaint filed by the Office of the Attorney General, a judge with the Allen County Circuit Court on March 26 ordered Shaver Motors of Allen County to pay $65,506.85 in restitution to 37 consumers who purchased extended vehicle warranties that they never received. The defendants also were ordered to pay $3,000 to the state for costs associated with the case. The judgment also provided court-ordered titles for three consumers. In addition, the judgment prohibits defendant John Shaver from owning, operating or managing another auto dealership in Indiana in the future.

The Office of the Attorney General recommends the following tips to help consumers avoid similar situations encountered by the consumers of Capitol Motors and Shaver Motors:

When buying a warranty:

• If a consumer is buying a car from a dealership and purchases a warranty administered by a third party, the consumer should:

• Ensure he or she receives a warranty contract at the time of sale and thoroughly reviews its terms;

• Ask the dealer when it will forward payment to the third-party warranty provider; and

• Contact the warranty provider after the date the dealer stated it would remit payment and ensure the warranty was purchased by the dealership and is active.

• If a consumer pays for a warranty contract and the warranty provider never receives payment from the dealership, the consumer should immediately notify his or her lien holder of the issue. In addition, the consumer should file a complaint with the Attorney General’s office at indianaconsumer.com or by calling 1-800-382-5516.

When awaiting titles for newly-purchased used vehicles:

• Be aware that dealers have 31 days from the date of sale to deliver a valid title.

• Ask either to see the title itself or a copy of the title; at a minimum, request to know the current location of the title.

• Ensure you receive a “dealer title affidavit,” which should be completely filled out and signed by the dealer stating the current location of the title and the date the dealer expects to convey the title to you.

• If failing to receive a title within 31 days, immediately file complaints with the Secretary of State Auto Dealer Division and also with the Attorney General’s office at indianaconsumer.com or by calling 1-800-382-5516.

Attached are the judgments from the cases relating to Capitol Motors in Delaware County and Shaver Motors in Allen County.