Fredericton police are investigating a "significant fraud" involving a used car dealer in the city, the force confirmed.
W&P Auto Sales, on Riverside Drive, closed in August.
More or less at the same time the company closed, NextGear Capital, a finance company serving car dealers, filed a claim with the Court of Queen's Bench against W&P Auto.
According to court documents, NextGear Capital extended a $ 250,000 loan to W&P Auto and the dealership failed to pay.
In the claim declaration, NextGear states that W&P Auto owes a principal balance of $ 136,894.78.
Even before the court presentation, several customers complained to the police of W&P Auto after difficulties in charging the privileges they were responsible under the trade-in agreements at the time of buying used cars.
In September 2018, Janelle Russell and her husband, Jeremy Russell, traded two Ford vehicles at the company in exchange for a new Nissan Murano.
As part of the deal, the dealership would have to pay the loans still owed to Ford vehicles once the financing for the couple's new car had arrived.
CBC contacted several Fredericton dealerships and confirmed that it is often the dealer's responsibility to repay the existing loan on the "exchange" vehicle when the financing for the new vehicle arrives.
There may be a short interval between the time the new loan arrives and the time the old loan is disbursed. The times depend on schedules and paperwork, but generally the old loan is paid within a couple of weeks.
But for the Russells, the outstanding loans have not been paid. About a month after exchanging their vehicles, they started receiving calls.
"We started receiving calls from Ford credit that our previous loans had not been paid with them on the car or on the truck in which we traded," said Janelle Russell.
Russell called W&P to find out what was happening. She was told that Ford only accepted payments made through Canada Post and, due to a postal strike, the payment took a long time to arrive.
All consumers find themselves in a difficult situation– Jennifer Ingram
A few weeks later, Russell learned that Ford Credit accepts payments from FedEx and other couriers. He returned to W&P with this information and asked again why the loan had not been paid. He has not received a reply.
In November, the loan on the car had been paid, but the loan on the truck was still pending.
At Christmas, the Russells wanted answers.
"E (W&P) would not have responded to our calls, our messages, our e-mails – nothing," Russell said. "They completely ignored us.
"So my husband's parents came in to try and come up with some documents because they didn't even give us a sales invoice or anything, and all they would give them for the documents was the loan information they had applied for. get the car loan ".
This is when Russell went to the police, who tracked the truck.
"It had been sold five different times with the privilege on it," he said. "He had come all the way to Maine. And nobody got the privilege. The dealers don't know if they registered badly, as they hid him … but they managed to do it somehow.
The police told Russell that they could not help and that he needed to find a lawyer.
How it should work
Under the Personal Property Security Act, a privilege on a vehicle must be registered with the provincial government, said Jennifer Ingram, a lawyer practicing in the area.
The information is available on a searchable online platform similar to Service New Brunswick.
"The system is set up in such a way that when a car is bought and sold you should check PPSA to make sure that if it is a pledge, you know and that hair is taken care of before buying it. work. "
Depending on the financing agreement, it may be the responsibility of the concessionaire to carry out the control of the bond or the lender. But that control did not always occur in the case of W&P Auto.
According to Ingram, not even a vehicle with multiple privileges would necessarily signal the lenders.
"Many of the banks involved in this are not your big five. They are not your big banks … they are not even researching serial numbers. They are just making sure their interests are recorded on cars."
There is not much appeal for customers.
"You can have consumers paying on cars that are at risk of being towed, because that's what financial companies will do," said Ingram. They will arrive and pick up the car and leave, and they will still have the loans in circulation. "
The Russells found a lawyer who sent a request letter stating that the loan had to be paid by the end of March and finally W&P complied.
But the delay in paying the loans ruined the Russells credit rating just as they were trying to buy a home.
Because of their damaged credit score, they were unable to get a mortgage and their hopes of owning a home were disappointed.
They also found that the car they purchased from W&P Auto has a privilege over a previous owner. But Russell said they have no choice but to continue making payments on the car for another year to restore their credit rating.
Not the only ones
The Russells are not alone in their concerns.
In February, Traci Taylor traded her Hyundai Elantra for W&P Auto for a Toyota Corolla. But the original loan on the Elantra in which he traded was not paid, leaving her with two car payments.
"I was paying $ 128 twice a week for my old car. That same week, I was paying $ 224 for my current car. I paid for everything for three months."
At that point, Taylor said he had to stop making payments on the old loan.
Taylor said he contacted the police and a lawyer, but is currently not pursuing any action.
He said that in the end the loan on Elantra was paid by W&P after months of pursuit of the company.
No charges were attributed to W&P Auto. None of the charges were verified in court and the company did not submit a response to the NextGear Capital claim statement.
The Fredericton police confirmed that there is an investigation, but it is ongoing and will not discuss the details.
CBC News has made several attempts to talk to W&P owners William Cornford and Peter Kennedy – by phone, Facebook and visiting their homes.
Kennedy was in his driveway to get on his vehicle when the CBC asked him about the alleged fraud.
"I have nothing to say about it," he said.
For the Russells, who don't have a mortgage yet, the whole experience left them frustrated.
"We're so angry and it caused us so much stress," Russell said. "I cry every time we talk about it because they hurt us so much."