By Tom Chaves on January 5, 2013

In a case in which the issue was tried for the first time in New Jersey, Millenium Mercedes Benz in Bridgewater, New Jersey was found liable for selling a Mercedes to a buyer for falsely representing it was a leased car that was being turned in when in fact it was a loaner car. The jury found that the sales person's misrepresentation violated the New Jersey Consumer Fraud Act and awarded the buyer $10,000 in damages which was trebled under that law to $30,000 in damages. The dealer was also ordered to pay the buyer's lawyer legal fees and expenses in the sum of $45,202.

Significantly, the New Jersey Appellate Division court upheld the jury award.

The facts of the case are not complicated; on March 21, 2009, the buyer bought a 2008 Mercedes Benz ML 350 from Millenium for $42,815. Later the buyer saw the remants of the stenciled "courtesy car" marking in the rear window. The dealer offered to take back the car for $10,000 less than the buyer paid. He refused and sued. An expert testified that a loaner car is worth 10% to 15% less in value than a used car turned in at the end of a lease because it is driven by numerous drivers with unknown driver skills and habits.

An ethical car dealer will always tell a customer whether car is coming from a lease or is a loaner car. The court decision does not state why the buyer did not receive a car fax report as that would have shown that the car was never leased.

Regardless, the legal principle caveat emptor (buyer beware) unfortunately frequently applies to consumers purchasing all kinds of products and services. At least this case is proof that the New Jersey Consumer Fraud Act protects innocent purchasers from blatant misrepresentations, even if from a car dealer.