Consumer complaint received 2024-08-08 00:00:00
Product: Vehicle loan or lease — Loan
Issue: Managing the loan or lease — Problem with fees charged
Company: CAPITAL ONE FINANCIAL CORPORATION
State: GA

Complaint narrative:
XXXX XXXX XXXX XXXX XXXX XXXX Mt. XXXX XXXX XXXX, GA XXXX **Subject : Notice of Rescission of Contract and Demand for Resolution** To Whom It May Concern, I am writing to formally notify you of my decision to rescind the retail installment contract dated XX/XX/XXXX, for the purchase of a XXXX XXXX XXXX XXXX XXXX. This decision is based on significant violations of the Truth in Lending Act ( XXXX ), breach of contract, misrepresentation of warranty coverage, deceptive financing practices, failure to disclose my right to rescission, and the improper inclusion of prohibited fees in the finance charge.

# # # Grounds for Rescission : 1. **Truth in Lending Act ( TILA ) Violation** : - XXXX included tax, tag, title fees, service fees, and registration fees in the finance charge calculation, which is prohibited under 15 U.S.C. 1605 ( a ) and Regulation Z ( 12 CFR Part 1026 ).

2. **Breach of Contract** : - By misrepresenting the finance charges and including prohibited fees, XXXX breached the terms of the contract, making it voidable.

3. **Misrepresentation of Warranty Coverage** : - XXXX limited warranty excluded services that by law should be included, violating the Magnuson-Moss Warranty Act ( 15 U.S.C. 2301 et seq. ), the Uniform Commercial Code ( UCC ), and the Federal Trade Commission Act ( FTCA ).

4. **Deceptive Financing Practices** : - The retail installment contract was misrepresented as extending credit directly from the dealership. Instead, I was made to pay a third-party finance company, Capital One Auto Finance , without clear disclosure. This practice is deceptive and potentially unlawful under TILA and the FTCA.

5. **Failure to Disclose Right to Rescission** : - CarMax failed to disclose my right to rescind the contract within the legally required period. Under TILA, consumers have a right to rescind certain credit transactions, and failure to disclose this right is a significant violation.

6. **Improper Handling of Down Payment** : - Despite being charged a finance charge, I was made to pay a {$5000.00} down payment in cash. This contradicts the principles outlined in 15 U.S.C. 1605 ( a ). If the finance charge covered all costs associated with financing the vehicle, the requirement of an additional cash down payment constitutes an unfair and deceptive practice. This practice is further supported by case law such as **Rodash v. AIB Mortgage Co. , 16 F.3d 1142 ( 11th Cir. 1994 ) **, which held that the improper inclusion of fees in the finance charge violates TILA.

7. **Misrepresentation and Inclusion of Warranty as Insurance** : - XXXX required me to obtain insurance before I could take possession of the vehicle and falsely represented a limited warranty as insurance, which is illegal. The limited warranty was included in the finance charge, contrary to the requirements of 15 U.S.C. 1605 ( a ). Representing that a warranty offers protections that it does not offer is also illegal under federal laws.

8. **Failure to Disclose Insurance Options** : - XXXX never disclosed that insurance could be offered through them, nor did they disclose the cost of such insurance. According to 15 U.S.C. 1635 ( b ) & ( c ), unless a specific statement in writing is furnished by the creditor to the person to whom credit is extended, setting forth the cost of the insurance, if obtained through or through their creditor, and stating that the person to whom the credit is extended may choose the person through which the insurance is to be obtained, the requirement to obtain insurance without providing these disclosures constitutes a violation. XXXX told me I had to get insurance to drive off the lot, never giving me an option and never offering insurance directly. This failure to disclose is a direct violation of TILA.

9. **Application of 26 CFR 15a.453-1 ( e ) ** : - The regulation pertains to the installment method of reporting income from sales of personal property. XXXX failure to properly disclose the finance charge in the Bill of Sale, while recognizing it in the Retail Installment Contract, violates the transparency required in installment sales and the accuracy of financial reporting.

10. **Discrepancy in Finance Charge Calculation** : - The contract specifies a finance charge of {$12000.00} on an amount financed of {$39000.00} at an APR of 9.23 % over 72 monthly payments of {$720.00}. However, this calculation does not add up correctly. At an APR of 9.23 %, the finance charge over the term of the loan should be significantly lower. This discrepancy further indicates misrepresentation and deceptive financing practices. 

# # # Misrepresentation of Warranty Coverage : The XXXX limited warranty excluded several services that should be included by law, violating the Magnuson-Moss Warranty Act ( 15 U.S.C. 2301 et seq. ), the Uniform Commercial Code ( UCC ), and the Federal Trade Commission Act ( FTCA ). Specifically, the warranty exclusions that are problematic include : 1. **Preventative Maintenance Services** : - Preventative maintenance services or parts replacement as suggested by the manufacturer in its maintenance schedule should not be excluded under a comprehensive warranty.

2. **Repairs Related to Manufacturer 's Defects** : - Repair or replacement of parts due to manufacturers defects should be covered. Excluding these goes against the implied warranty of merchantability under UCC 2-314 and the Magnuson-Moss Warranty Act.

3. **Failures of Covered Parts** : - Property damage arising from the failure of covered parts should also be included in the warranty coverage. The exclusion of these services limits the consumer 's protection and violates the Magnuson-Moss Warranty Act and the Federal Trade Commission Act ( FTCA ) .

# # # Legal Support : 1. **Truth in Lending Act ( TILA ) ** : - **15 U.S.C. 1605 ( a ) ** : Defines finance charges and explicitly excludes tax, tag, title fees, service fees, and registration fees from being included in the finance charge.

- **Regulation Z ( 12 CFR Part 1026 ) ** : Outlines the requirements for clear and accurate disclosure of finance charges, prohibiting the inclusion of certain fees.

- **15 U.S.C. 1635** : Grants consumers the right to rescind certain credit transactions, requiring clear disclosure of this right.

- **15 U.S.C. 1635 ( b ) ** : Specifies the effects of rescission, including the return of any money or property given as a down payment.

- **15 U.S.C. 1635 ( c ) ** : States that the consumer 's written acknowledgment of receipt of any disclosures required under this subchapter creates a rebuttable presumption of delivery.

2. **Magnuson-Moss Warranty Act** : - Requires clear and detailed disclosure of warranty terms and prohibits disclaimers or limitations not clearly stated in a single document.

3. **Uniform Commercial Code ( UCC ) ** : - **UCC 2-314** : Implied warranty of merchantability ensures goods are fit for ordinary purposes.

- **UCC 2-315** : Implied warranty of fitness for a particular purpose applies when a seller knows the particular purpose for which the goods are required and that the buyer is relying on the seller 's skill and judgment to select suitable goods.

4. **Federal Trade Commission Act ( FTCA ) ** : - **15 U.S.C. 45 ( a ) ** : Prohibits unfair or deceptive acts or practices in or affecting commerce. Misrepresentation of warranty coverage and deceptive financing practices constitute unfair and deceptive practices.

5. **Case Law** : - **Ford Motor Credit Co. v. Milhollin , 444 U.S. 555 ( 1980 ) ** : Emphasizes the importance of clear and accurate disclosure of finance charges under TILA.

- **Rodash v. AIB Mortgage Co. , 16 F.3d 1142 ( 11th Cir. 1994 ) ** : Held that the inclusion of certain fees in the finance charge, which should have been excluded, constituted a violation of TILA.

- **Chrysler Credit Corp. v. Whitney , 51 Ohio St.3d 75, 554 N.E.2d 1163 ( 1990 ) ** : Addressed the improper inclusion of fees in the finance charge.

- **Santos-Rodriguez v. Doral Mortgage Corp. , 135 F.3d 28 ( 1st Cir. 1998 ) ** : Highlighted the significance of accurate finance charge disclosures and the impact of including improper fees.

Lastly where the Retail Installment Contract was signed I never signed. Someone else signed my initials.

Company response to consumer: Closed with explanation