The plaintiff in the action, Sonia Barrera, alleges that's what happened to her. The Los Angeles resident's 2002 Nissan Sentra was allegedly repossessed less than a year after she purchased it. Shortly after her car was resold at auction, Barrera was allegedly told she still owed Nissan $12,787--the difference between the car's $19,120 purchase price and the approximately $6,400 that Nissan Motor Acceptance received when the car was sold at auction.

The deficiency judgments in themselves are not illegal--when cars are seized for non-payment of loans, borrowers not only lose their cars and suffer damage to their credit ratings, they also are often held liable for deficiencies that reflect the depreciation of the car's value. That can leave the borrower saddled with thousands of dollars in additional payments and is allowed by most, if not all, states.

Allegedly, Nissan makes loans to buyers with poor credit to increase sales and profits for itself, shareholders and dealers through an unfair, commercially unreasonable and fraudulent repossession and sales scheme. California law requires that repossessed cars be sold at public auction to increase the number of bidders and, presumably, boost resale prices. The higher resale price gained through opening the auctions to the public can reduce the amount of debt the original owner is stuck with because it can lower the deficiency judgment, which usually equals the original loan amount plus repossession costs, minus the consumer's payments and the value recovered at auction.

The action alleges that Nissan's scheme is illegal because the auctions have been closed to all but Nissan dealers. This allows them to buy the repossessed cars at what amounts to a much lower than normal cost, since public buyers cannot inflate the prices by bidding. This, of course, leaves the original owner with a much greater deficiency judgment, since the auction price did not offset the deficiency as much. Once the Nissan dealership has repurchased the autos at the artificially depressed price, it can then resell them all over again.

Nissan Motor Acceptance recently settled a Tennessee lawsuit that alleged that the company charged huge markups--additional fees paid by customers to qualify for loans--to minority borrowers. As part of that settlement, Nissan plans to offer no-markup loans based on good credit to African-American and Latino borrowers. Ms. Barrera's suit doesn't address the loan-markup issue. However, her attorneys note that she was charged more than $19,000 for a car with a sticker price of $14,000. The attorneys said that if her lawsuit is given class-action status, they would request information about the ethnic makeup of Nissan's borrowers and potentially revise the suit to add discrimination claims.