Ford Credit Co. Hit With Class Action Over Leasing Policies

On Tuesday, a class action lawsuit was filed against Ford Motor Credit Company LLC claiming that the company cheats lessees out of overpayment equity through illegal leasing policies used by its consumer credit branch.

Lead plaintiff Michael Ellis argues in his class action lawsuit that Ford’s policy of requiring lessees to first pay for their vehicles in full before selling to a third party cheats lessees out of thousands of dollars they much pay in sales tax to complete the transaction and thus cheats lessees out of the full value of their vehicle in the sale.

Ellis alleges that when he attempted to sell a vehicle he leased from Ford to a third party dealer in an attempt to liquefy his equity in the vehicle, Ford told him he would first have to purchase the vehicle, including the tax and licensing fees to complete the transactions.

“The commercially unreasonable restrictions that were imposed on [the plaintiff] were completely and totally unnecessary, and were specifically designed by Ford to deter [the plaintiff] from being able to cash in on the equity of the vehicle [the plaintiff] paid for,” the class action lawsuit alleges.

The recession in the late 2000s created a shortage of quality used vehicles on the market and forced lessors to become more conservative in drawing up leases, according to class action lawsuit. This caused the contracts to over estimate depreciation in those vehicles and, as the recession eased its grip over the years, those previously leased vehicles nearing the end of their lease terms became more valuable than the amount owed on the leases.

According to the Ford class action lawsuit, consumers can cash in on that equity by buying the car and reselling it, but Ford’s policy of requiring lessees to buy the vehicle before selling it to a third party robs them of that equity. Ellis argues that Ford’s policy is a violation of the Moscone Vehicle Leasing Act and constitutes unfair competition by placing “unreasonable restrictions” on Ellis that made it impossible for him to capture his “rightful” equity in the vehicle.

“Ford Credit has designed a lease which is so conservative as to be structured in a manner wherein vehicles accumulate equity,” Ellis argues in the Ford Credit class action lawsuit. “Unfortunately, Ford Credit is trying to block consumers from enjoying the accumulated equity by imposing commercially unreasonable and unfair restrictions on consumers trying to cash in on that equity, that they paid for.”

The Ford Credit class action lawsuit seeks to certify a Class of “[a]ll consumers who leased vehicles with Ford Credit … from within the last four years … tried to sell their vehicles in order to capture the equity in their leases, but were prevented from doing so due to Ford crediting imposing unreasonable and unfair restrictions on their selling their vehicles.” The plaintiff also seeks an injunction barring the alleged unfair competition, restitution, damages, interest and fees.

Ellis is represented by Adam Rose and Robert Starr of the Law Offices of Robert Starr.

The Ford Credit Leasing Policy Class Action Lawsuit is Michael Ellis, et al. v. Ford Motor Credit Company LLC, et al., Case No. BC565558, in the Superior Court of California, Los Angeles.