Our estimation is that car dealerships get a demand letter from a customer once every 45 minutes in California. Not only are demand letters not going down, we see the number of cases going up 50% year over year, so the curve on the number of lawsuits are increasing in a steep curve. Who knows what the end is going to be?!
Ali R: Approximately how often does a car dealership in California receive a demand letter?
Ali K: Our estimation is somewhere around 1.3 to 1.5 demand letters per hour is received by car dealerships in California.
Ali R: You just said 1.3 to 1.5 demand letters per hour.
Ali K: That’s right. That’s per working hour of a dealership.
Ali R: Do you see the number of lawsuits and demand letters going down anytime soon?
Ali K: Well, not only are they not going down, we see the number of cases, especially in the past four years, going up 50% year over year. And so the curve on the number of lawsuits that get filed are increasing like this. And we’re beginning to see it go up in a steep curve and who knows what the end is going to be. And it’s very understandable, because a plaintiff comes in, they settle a case. They rescind the contract, they return the vehicle after two and 1/2 years of use, get all their money back. It’s just more incentive for them to do the same thing the next time or maybe tell their cousin or their uncle or their siblings or their parents, et cetera, as to how to get out of out of a contract or to possibly get all their money back. So with the advent of internet, and people being able to share information, you’re just going to see these types of claims continue to increase. And we think by a large amount.
Ali R: We’ve also seen lawyers that are sending letters to customers, dealers’ customers. I mean, the customer comes in and buys a car, happy, smiling, everything is great. Some of them, a lot of times, have a close personal relationship with the dealership and a year and 1/2 later, they get a demand letter that has the name of that customer on it. We’ve also seen billboards all over the place now. It reminds me a lot of the personal injury lawyers and the accident lawyers. And you’re seeing the same thing now with lawyers that are suing car dealerships.
Ali K: If you remember the older days, the number of lawsuits with regard to personal injury, slip and fall, was huge. And now you see almost every place you go, whenever they’re mopping the floor, they have little signs that say, you know, be careful, you know, slippery floors, et cetera. The industry has to take reasonable steps in order to prevent injury. And that’s where DealerXT comes in when it comes to disclosures. And when it comes to quote verbal misrepresentations, it prevents those types of claims and those types of injuries before they happen and helps a lot in a dealership being able to survive as far as their business is concerned.