Dealer Fraud

If you have recently purchased a vehicle and you suspect that the car dealer has committed car fraud you may file a lawsuit. It would be a good idea to speak with an experienced auto dealer fraud attorney, who will be able to evaluate all aspects of your case and explain all options available to you. An experienced attorney can also help you in filing a lawsuit for your damages and will work with you to ensure the best possible outcome for your case. Remember that in some states, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action.

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Both cases involve motor vehicles. However, auto dealer fraud cases are very different from Lemon Law cases. The main focus in auto dealer fraud cases is the improper tactics used by a car dealer during the vehicle sale process. Lemon law cases concentrate on the problems or defects with the vehicle itself.

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In many states, this is what you must do first. Before taking any legal action against the dealer for possible auto dealer fraud you or your attorney are required to contact the auto dealer and give them an opportunity to correct the problem to your satisfaction. This contact should be in writing. Make sure to clarify both the problem (i.e. the dealer’s failure to disclose the history of vehicle), and the steps you would like the dealer to take to resolve the problem (i.e. refund of the vehicle purchase price).

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The odometer of a used vehicle should indicate the total miles the vehicle has been driven. A “mileage rollback” or “odometer rollback” is a form of auto dealer fraud, which occurs when the odometer is altered or “rolled back” to display a number that is lower than the vehicle’s actual mileage.

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There is specific information that the car dealer is responsible to reveal to the car buyer before the purchase of the vehicle. In most states, car dealers must disclose whether a used vehicle has incurred significant damage in a previous accident, has been designated “salvaged”, or has been flood-damaged.

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One of the sales tactics of car dealers is false or deceptive advertising called “Bait and switch”.  This happens when a car dealer lures potential buyers to the dealership by advertising one vehicle at a very law price, and then tells the customer that the particular vehicle is no longer available, meanwhile using aggressive tactics to sell a different, more expensive vehicle (or the advertised vehicle at a price higher than the advertised price).

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At almost any stage of the vehicle purchase process — from advertising, to negotiation of vehicle pricing and financing terms - automobile dealers use deceptive and unlawful practices that are termed as “Auto dealer fraud”. Some of the examples of auto dealer fraud include “bait and switch” advertising practices, deceptive inflation of vehicle prices, and failure to disclose information about a vehicle.

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Whitehall Discovery Ford owner/manager Tony Nielsen was sentenced to jail for felony fraud. The former owner of the dealership has confessed that earned more than $300,000. He had defrauded hundreds of customers an extended warranty scam and failure to pay off loans on traded-in cars.  Nielsen owned and Discovery Ford located at operated 3001 W. Holton-Whitehall in Whitehall Township from April 2005 through August 2006. Starting November 2006 the dealership had a new owner and was named Whitehall Ford.

The investigation of this case took more than a year and was very complicated. During the investigation the state police had to interview more than 400 people and review all the financial documents of the dealership.  According to authorities the business of the dealership owner began to falter about three years ago and he started to keep customers’ payments for extended warranties without buying the policies, and failed to pay off the outstanding loans on traded-in cars.  The dealership also failed to forward customers’ payments for “gap insurance” to cover the difference between the value of a car totaled in an accident and the amount owed on a new car.

The state police started the investigation in August 2006 when a customer of the dealership contacted them and informed that he had taken a vehicle to another Ford dealer for service and learned the car never was registered for an extended warranty. Investigators quickly found Nielsen’s dealership had failed to forward money, in most cases $2,000, paid by customers for the warranties.

Nielsen declined the opportunity to speak at the court. The attorney of defendant argued for leniency, taking into consideration that the former dealership owner was making efforts to pay complete restitution to his victims.

Nielsen, 43, was sentenced to jail for 10 months. He is eligible for work release, but if he gets one, it will be only for 48 hours a week. The defense requested Nielsen get extra time off jail in order to work at an existing job in the area or to continue flying around the country conducting “tent sales”. The judge vetoed this request of defendant. Moreover, the judge ordered that Nielsen perform 100 hours of community service in the County and placed on 30 months’ probation period.

Pursuant to the order of the Judge Nielsen will also be responsible to pay full restitution to his victims and $78,052 to Universal Warranty the insurance company that covered the extended warranties. 

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For the average American purchasing a new or used vehicle is a major investment. Most Americans consider not only the cost of the automobile, but also the fact that it is a key factor to financial prosperity. People need a reliable transportation to get to the places where they can to earn more money pay off the car loan, as well as the car insurance, the mortgage, the credit card, and the household bills. 

However, when purchasing a new or used car an auto buyer should be aware of problems that may arise after the purchase and are the result from auto fraud.  Auto Fraud occurs when the seller of the vehicle fails to disclose the complete history of the car he is selling, or alters or destroys evidence pertaining to any part of the vehicle’s age, condition or inherent or acquired defects. When purchasing a used car an auto fraud can come in a variety of forms such as odometer rollbacks, salvage or flood vehicles, yo-yo sales, credit consolidation sales, and resale of damaged vehicles without full disclosure.

SIX QUICK STEPS TO AVOID AUTO FRAUD:

Tip 1: Make friends with a mechanic

When you intend to purchase a car a mechanic can be your best friend. A friendly mechanic can tell you what specific problems may a particular brand or model of a car have and which cars are relatively hassle-free. Once you make a decision on what type of vehicle you want consult with a good and experienced mechanic who can help you determine the best manufacturer based on what type of car you are looking for. 

Tip 2: Arrange for financing through your bank or credit union

Most car dealerships make their profits by providing their own financing to auto buyers. When you buy a car you dealer will try to convince you to borrow from them. However you should know that banks almost always offer a substantially lower rate than your dealership. Before shopping for a new vehicle seek financing approval from your bank or credit union. You have a chance to receive up to 90 per cent financing, especially when you have a prior lending history with that bank. 

Tip 3: Ask for a copy of the warranty, take it home and read it

Car dealers make most of their profit through extras and add-ons that increase the cost of the vehicle. Many used car dealers usually pitch a dealer warranty, which is almost always an add-on.  The big print in these documents promises comprehensive coverage and prompt service for the vehicle you buy. However this is not the truth.  When something actually does go wrong with your car the dealer will probably refer to what is written in the small print. For example, one of the common things in dealer warranties is the phrase “wear and tear items not included”.  You will hear this phrase over and over again if your car has problems.

Clarify exactly what is covered with warranty before signing any paperwork. If you don’t feel comfortable with it ask the dealer for a signed, authorized amendment stating exactly what you are seeking.

Tip 4: If necessary, amend the warranty to protect yourself from Lemon fraud

If you decide to purchase a repair and maintenance coverage for the price of your warranty, make sure the following statements are somewhere on the warranty:

“THIS CAR HAS NOT BEEN RETURNED TO A DEALER OR MANUFACTURER BECAUSE OF LEMON LAW DEFECTS OR COMPLAINTS.” 

“THIS CAR HAS BEEN INSPECTED FOR COLLISION DAMAGE AND COLLISION REPAIRS AND HAS BEEN FOUND TO BE FREE OF COLLISION DAMAGE OR REPAIRS.”

If you don’t see these statements anywhere on the warranty make an amendment and add them. Make sure the amendment is acknowledged and signed by an authorized representative of the dealership.

Tip 5: Take it for a long test drive

Leave a copy of your driver’s license at the dealership and take the car out for a test drive. It will be a good idea to take your mechanic with you and ask him to look under the hood. Drive the car in multiple road conditions: city streets with heavy traffic, highways with open spaces, straight and curvy roads, and hills. If your mechanic likes what he sees then you are probably in good shape.

Tip 6: Don’t be in a rush

Most importantly avoid impulse buying.  A car salesman benefits if the sale happens quickly, so he will use different tricks to rush you and make you sign the papers in a 24 hours. Don’t let the car dealer rip you off. Do as much research as possible before purchasing a used car.

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General Motors (GM) has been asked by the Consumer Commission to pay Rs three lakh in compensation to the widow of an advocate, who was sold a defective car, drawing him into a legal hassle till his death.
Ruling that the manufacturer is liable for sale of defective goods, the Commission presided by Justice J D Kapoor asked the GM’s subsidiary to pay damages to the widow of G L Sanghi, whose car malfunctioned from the day of purchase itself.

Sanghi was not even delivered the original keys of his brand new car which he had purchased on December two, 1996 from GM’s local dealer Regent Automobiles in New Delhi, forcing him to send repeated requests for it. He received the original key only after eight months, the complaint had said.

Sanghi, a south-Delhi resident, also found a number of defects in his car, including low mileage and engine overheating, which made driving uncomfortable, it said.
As many as 16 letters were sent by Sanghi to the automaker and the dealer enumerating the defects in the car, but the defects were not rectified.
Sanghi had filed a consumer case in 1998 but after his death in January 2006, his family members sold the car.

GM denied any manufacturing defect in its car and contended the troubles experienced by Sanghi were owing to his driving style.
The Commission also comprising Members G D Dhanuka and Rumnita Mittal, however, found no substance in automaker’s claim and held it guilty of deficiency in service for manufacturing and selling a defective vehicle.
It asked GM to pay damages for the loss suffered in the value of the car, mental agony due to sale of defective car.
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