May 27, 2015
Can a dealership claim a deposit is non-refundable if it's not in writing?
Dear Consumer Ed:
Can a dealership claim a deposit is non-refundable if there was no written agreement and those terms are not explicitly written on their website?
Consumer Ed says:
Generally, verbal contracts for transactions that are more than $500 are voidable (such agreements are usually required to be in writing). However, if there were any circumstances that would make your oral agreement enforceable, the terms of such an agreement would be found in your discussion with the dealer. You don’t indicate how you came to pay the dealer this deposit. Even though there was no written agreement, a deposit can be understood as either money paid in anticipation of delivery of the vehicle or, under some circumstances, money paid to the dealer for its services rendered in finding you a car. The dealer is likely taking the latter stance. However, if the terms under which you paid the deposit did not specify whether it was a deposit or a charge for the dealer’s services, the likely presumption is that you were paying the funds in anticipation of the sale going through; that is, as a deposit. If you also agreed that the funds would be returned in the event the sale fell through, then the dealer should be required to refund the money.
Given this information, if you believe that the dealer in this case has no right to keep your deposit, you have several options. First, you should write a letter to the dealership clearly explaining the situation and requesting a full refund of your money. You could also submit a complaint to the Better Business Bureau to receive help obtaining a resolution and to warn other consumers about the dealership’s practice. You can also submit a detailed complaint to the Georgia Attorney General’s Consumer Protection Division, which is responsible for investigating violations of the Fair Business Practices Act. If the dealer continues to refuse to refund your money, you may also want to speak with an attorney regarding possible actions you could take. The State Bar of Georgia provides information to help you locate an attorney in your area that can assist you.
To avoid such pitfalls in the future, before you start shopping for a car, make sure you select a reputable auto dealer. You can research dealerships through the Better Business Bureau’s website to help you avoid doing business with companies that use these tactics. When purchasing a vehicle, do not take possession of it until your financing has final approval from the lender. Rather than obtaining financing at the dealership, consider applying for financing through your bank or credit union before you start shopping. This will allow you to know in advance that you are approved for the loan and it will make negotiations much easier. You should also require that the dealer put everything in writing. If you are going to place a deposit with a dealer, you should obtain or yourself create a written document stating the purpose of the money and under what circumstances you are entitled to a partial or full refund.