Opinion ID: 74643
Heading Depth: 3
Heading Rank: 1

Heading: The Extended Service Contracts

Text: In 1995, Plaintiffs purchased automobiles from Defendant Heard Chevrolet and extended service contracts from General Motors through Heard Chevrolet. To finance these purchases, Plaintiffs entered into retail installment contracts (“RICs”) with Heard Chevrolet. Specifically, Plaintiff Jones purchased a 1993 Geo Storm from Heard Chevrolet and executed her RIC on February 27, 1995. As part of the purchase, Jones paid $2,495 for an extended service contract. Heard Chevrolet itemized the amount paid and being financed, on the RIC, as follows: Itemization of Amount Financed 1 Cash Price (including any accessories, services, and taxes) $ 9795.45 2 Total Downpayment . . . $ 800.00 3 Unpaid Balance of Cash Price (1 minus 2) $ 8995.45 4 Other Charges Including Amounts Paid to Others on Your Behalf: ... H Other Charges (Seller must identify who will receive payment and describe purpose) to GENERAL MOTORS 12/12 for SERVICE CONTRACT $2495.00 Heard Chevrolet concedes that its disclosure in this “Itemization” was inaccurate regarding the amount Heard Chevrolet, as seller, paid to General Motors on Jones’s behalf for the extended service contract.1 Heard Chevrolet did not pay 1 The consumer is not automatically entitled to an itemization of the amount financed unless a written request for it is made. See § 1638(a)(2)(B); 12 C.F.R. § 226.18(c)(2). The creditor is allowed to skip this stage and simply provide the itemization of the amount financed without being asked for it. See 12 C.F.R. Pt. 226, Supp. I § 18(c)(1). This appears to be what Heard 3 $2495 to General Motors as represented. Heard Chevrolet paid General Motors only $290 and retained an “upcharge” or mark-up of $2,205 for itself.2 In addition, Heard Chevrolet concedes that it did not disclose to Jones that it was retaining any portion of the amount listed as paid to General Motors. Plaintiff Pritchett’s RIC contained a similar misrepresentation when she purchased a 1991 Pontiac Grand Prix from Heard Chevrolet on May 9, 1995. As part of the purchase, Pritchett paid $765 for her extended service contract. Heard Chevrolet inaccurately represented in Pritchett’s RIC that Heard Chevrolet had paid General Motors $765 for her service contract. In fact, Heard Chevrolet retained a substantial portion of that $765.