Dealer Fraud

California became the first state in the country to pass an auto “lemon law” in 1982, and that pioneering legislation remains one of the most powerful, consumer-friendly laws in the country. It has, without a doubt, saved millions of dollars in headaches for consumers who have been troubled by defective automobiles who would otherwise have had to just “live with it.” Unfortunately, the California lemon law covers new cars only, and those who purchase used cars in California have still been expected to take risks. What if the car has hidden defects? What if the seller knows something bad about the car that he or she isn’t saying? Until now, the sole responsibility fell upon the buyer.
Signed into law by Governor Arnold Schwarzenegger in late July, the Car Buyer’s Bill of Rights offers a significant change in the way used cars are sold in California. Buyers will now have the option of returning a used vehicle to the point of purchase after a two day “cooling off” period. This gives buyers an opportunity to get to know their vehicles and, with luck, a chance to find any defects or problems with the vehicle that was either unknown or undisclosed at the time of sale.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

When trading in your old vehicle for a new one, you might be tempted to leave it to the dealer to pay off the existing loan, either by using part of the old car’s trade-in value or rolling any unpaid balance into your new-car loan. While that arrangement might sound convenient, it carries risks, as many Californians recently learned.
There’s a chance that the dealership may go out of business before paying off the note, leaving you on the hook for the remaining loan balance on your old car, along with the loan on the new car. The problem has become widespread in California, where hundreds of consumers have lost millions of dollars. The state is setting up a fund to reimburse victims.
Another danger is that the dealer might delay paying off the loan, causing your credit report to show missed monthly payments. That can damage your credit score, forcing you to pay more for future loans and insurance.
Consumers for Auto Reliability and Safety, a public-interest group in Sacramento, Calif., advises car buyers to pay off any outstanding loan on their old vehicle before trading it in for a new one. The group notes that doing so may be difficult, especially if the money you need to pay off the loan is tied up in the value of the trade-in.
If you can’t pay off the loan, you might want to wait until your payments are finished before shopping for a new car. That’s an especially good idea if you’re “upside down” on the loan and owe more money than the vehicle is worth. If you trade in a car under those circumstances, a dealership will typically add the balance of the outstanding loan to the new-car loan, leaving you essentially paying off two loans at the same time.
Similarly, whether you’re buying a used car from a dealership or an individual, make sure that any previous loan has been satisfied. If it hasn’t and the former owner falls behind, the lien holder might threaten to repossess the car. You can tell there’s been a loan if a lien holder’s name is on the front of the title certificate. If there is one, ask for proof that the lien has been paid. The lender should give you a lien release.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

Three years ago, a woman had purchased a car from a local used car dealer. At that time, she had opted to buy a $1,200 warranty. The car and warranty were both financed at a very high interest rate.Approximately one year after she bought the car, the clutch went out. When the mechanic inquired about the warranty, he learned that there was no warranty. As it turns out, the mechanic assured her these repairs wouldn’t be covered anyway. She then called the dealership, and after months of dispute, the dealership discovered that the warranty paperwork was never processed. She filled out new warranty paperwork upon the dealer’s request, and was assured the problem was resolved. Keep in mind this “resolution” took place two years after the initial purchase of the vehicle and warranty.

However, in November 2003 the distributor went out. Again when the mechanic inquired into the warranty, he was told there was a warranty, but it had been cancelled because it was purchased two years after the purchase of the vehicle. Again, she contacted the dealership, who found out that the warranty had been denied when the paperwork was submitted in 2002. The dealer’s account had been credited $1,200 in August, 2002. Had we not researched this we felt they would have never given the money back.

To receive her refund, she had to pay off the remainder of the car loan, which was about $1,100. $1,200 of this high interest loan was for a warranty she had never received. All in all, the refund was $1,200, but the loan payoff was $1.100, car repairs were $1,550 (most of which, would have been covered by the warranty) and the rental car bill totaled $350, spanning the week and a half it took to figure out this fiasco. Not to mention all of her valuable time (she runs her own business out of her home as well as being a single mom) and three years of interest on $1,200. All of these unexpected expenses had to come out of pocket jeopardizing the ability to pay household bills. Does she have any recourse to get back some or all of her money from the dealership, who is clearly and admittedly at fault?

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

There are several ways of how to trick the customer into the dealership. One of the most widespread ways is falsely quoting the low price, which is, in fact, not so low.

 The same thing happened to a customer, who was quoted a really low price for his new 2008 Cadillac CTS. Without having any doubt or even surprise, he signs a contract to lease it at $400 per month with $3,000 total down payment. Who can negate the price is perfect?

 It takes the dealer a week to call the customer back and tell him that the deal had not been approved by the bank and a new contract had to be signed at $600 per month with $4000 total drive off. How could the price change so quickly? We can only guess that the initial contract had never been sent to the bank for approval.  The law price was falsely quoted to trick the customer into the dealership. It turns out, that sometimes expensive means cheaper.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

A former Bartow car dealer has been sentenced to more than 11 years in prison for defrauding a bank with false applications for financing.

John C. Giovanetti, 52, will also have to make restitution of more than $1 million to SunTrust Bank.

A jury Monday convicted him on eleven counts of wire fraud, bank fraud and one count of conspiracy.

An indictment said Giovanetti, the former owner of Big Oaks Buick Pontiac GMC, Inc. of Bartow, was responsible for having his employees fax falsified applications for financing to SunTrust Bank.

This was accomplished, prosecutors said, by requesting financing for vehicles no longer in Big Oaks possession.

It resulted in Giovanetti illegally receiving $3.5 million from the bank.
__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

Car-dealer fraud is plaguing our country. The tactics being used are so sly that even informed consumers who do their homework are being taken for hundreds, and often thousands, of dollars.

These scams add many millions of dollars each year to the profits of car dealers at the expense of consumers. While some profit is necessary, consumers are being ripped off beyond reasonable need through the sale of useless add-on products and services, the unnecessary markup of vehicle prices, the hidden inflation of loan terms and by other means described in our report.

Evidence from recent litigation, industry insiders and consumer complaints show that these practices are not restricted to a few areas or dealerships. Further, it is very likely that deceitful trends are spreading as more and more dealerships become part of major conglomerates.

Public Citizen does not believe that graft is necessary for auto dealers, as an industry, to remain economically viable. We also do not believe that that all — or even most — dealerships are corrupt. Dealers should work with law enforcement to root out corruption where it exists and should commit to creating a transparent, accountable and consumer-friendly sales and financing process.
__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

California’s Car Buyers Bill of Rights gives used car buyers the right to return the vehicle for any reason within two days, but only if the buyer agrees to pay a fee ranging from $75 to $400 depending on the price of the vehicle. The first problem is that many dealers are persuading buyers to waive this protection. A second problem is that some dealers are simply refusing to take vehicles back even when the buyers paid for the return option. Some refuse to take back vehicles without payment of unauthorized “restocking” fees.

On November 28, 2007, consumer groups held a press conference on the steps of the Capitol to highlight the defects in the law. Rosemary Shahan of the consumer group CARS pointed out there is no good reason a buyer should have to pay anything for the two day right of return. If the vehicle is returned, the law provides for reasonable “restocking” fees and that should be sufficient compensation for the inconvenience.

Oscar Marin Fuentes is a person, who was not protected by the Car Buyers Bill of Rights. Fuentes purchased a used 2005 Chevy Silverado from Capital City Motors in Sacramento. The dealer had Fuentes, who does not speak fluent English, waived the two right of return. With a day or two after taking delivery, Fuentes noticed that door would not seal and air was coming in gaps in the cabin. Fuentes returned the truck to the dealer the next day asking for his $23,500 back, but the dealer refused. Investigation revealed the truck had been in two severe accidents, one a roll-over. The air bags had popped.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

The California Department of Motor Vehicles (DMV) has charged Gunderson Chevrolet, located in El Monte, Calif., with multiple counts of fraud, deceit, and misrepresentation in connection with the sale and lease of new and used cars to more than 1,500 customers, during the period from February 1999 to May 2000. It is the largest dealer fraud case in the past few years in California.

Central to DMV’s case against Gunderson Chevrolet is the selling of a windshield etching theft protection program. Under this program, ID numbers are etched on the windows of vehicles to clearly identify the vehicle in case of theft. Purportedly, if one of these vehicles was stolen, the owner of the vehicle participating in the program could receive up to $5,000. DMV alleges that Gunderson Chevrolet fraudulently used and misrepresented the nature and the price of this theft protection program in over 1,500 cases and added over $400 to the price of each vehicle.

The suggested retail price for the theft protection program was $299. The actual cost of the program to Gunderson was $29. According to DMV, the Gunderson Chevrolet sales staff promised customers there would be no additional charge for the theft protection program, but later added hundreds, sometimes thousands of dollars, to the price without the acceptance or knowledge of the customers.

In connection with 54 vehicles involved in the window etching theft protection scheme, DMV contends that Gunderson violated multiple Vehicle Code provisions designed to protect customers. For example, in three cases, DMV alleges that customers paid for the etching, but never received it.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

Within the last week, the Associated Press reported that a lady who won a car on the game show “The Price is Right” had filed a lawsuit against the game show on CBS Broadcasting and the auto dealer who sold her the car. Back in 2004, she won a new 2004 Pontiac GTO Coupe while appearing on the show. She had the car for approximately a year when she took it in for service and learned that it had been wrecked and repaired before it was delivered to her as a “new” car.

This lawsuit has garnered publicity simply because of the connection with “The Price is Right.” A car dealer took a car that they knew had been wrecked, repaired it and passed it off to this contest winner, ripping her off for potentially thousands of dollars. Then the contest winner somehow finds out about it and sues. This happens every day all over the United States.

Car consumers don’t realize how much money is involved in buying and selling cars in the U.S., or how competitive the market is, or how greedy automobile dealers can be, or how people who work in the industry, for whatever reason, get to a place where misleading consumers and taking advantage of them isn’t seen as wrong but as a legitimate way to do business.
__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]

The former owner of Whitehall Township’s Discovery Ford dealership has pleaded no contest as charged to three felony fraud charges.

Tony Allen Nielsen will avoid state prison under a sentencing commitment. That still leaves the option of a county jail term of up to a year when Nielsen is sentenced at 8:30 a.m. Jan. 11. Judge allowed Nielsen to remain free on bond until sentencing.

Nielsen also is expected to be socked with a huge restitution tab. Prosecutors say he has already paid back more than $300,000 that authorities say he stole by defrauding hundreds of customers.

Nielsen, 43, now of Wayland, pleaded to three counts of larceny by conversion of more than $1,000 but less than $20,000. A no-contest plea is not an admission of guilt but results in conviction, and judges treat it as a guilty plea at sentencing. It’s allowed when a defendant faces civil liability, as in Nielsen’s case.

The criminal charges against Nielsen were the outcome of a complicated, yearlong investigation that included repeated interviews with more than 400 victims allegedly defrauded in an extended warranty scam and failure to pay off loans on trade-in cars. Investigators also painstakingly scrutinized reams of financial documents.At the time of the fraud — from April 2005 through August 2006 — Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall.

__________________________________________________ 

[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]