Dealer Fraud

On the transaction, one of the biggest profit source for the dealer is considered to be the trade-in price being offered to you. Before trading in a vehicle consumers try to get information from the Kelly Blue Book and web sites to help them determine the price of the used vehicle. However, it is very difficult to to determine the value of the trade in vehicle and most consumer are willing to accept a lower trade-in than what the vehicle is actually worth. This is when the dealers use their tricks to scam the consumers. The dealer knows that when the consumer is tempted to buy that new car his/her resistance has pretty well been lowered and he/she is more likely to accept a bad deal in the trade. Most car dealers will make you believe that they are actually providing a service to you by buying your old car. The best way to avoid a scam with your trade-in is to negotiate your trade in value and later talk with the dealer about purchase of a new car.

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Though “bait-and-switch” is one of the oldest dealer tricks, it is still the most favorite tricks of salesmen and is as effective as ever. What the salesman will do is basically inform you about all the problems and defects of the vehicle you intent on buying or leasing. Be aware that the dealer does this only to introduce you another vehicle and get you into another deal, which is more expenive and profitable for him. The best way to avoid this scam is not to be dissuaded by such attempts of the dealer.

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Be aware of the dealer who claims that they have to charge a certain price because their lenders or the leasing company will not allow them to sell below a stated price. The truth is, lenders and leasing companies have have nothing to do with the car’s selling price. This is just another good excuse for the dealer to make profit. Also some dealers may state that you purchase the extended warranty or service contract. Remember that this is not mandatory and is not required by the lender or leasing company. This is simply another way for the dealer to earn more money by selling you extra items.

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Actually, “holdback” is profitable for the dealer whereby the dealer pays from 1% to 3% less than the invoice price which may be shown to you by the sales manager. First the dealer buys the vehicle from the manufacturer at the stated price on the invoice. Later, when the dealer sells the car the manufacturer provides a rebate to the dealer for the costs of maintaining that vehicle in its inventory for a period of 90 days. Taking into consideration that most vehicles are sold more rapidly, i.e., within 90 days, some part of that rebate or reimbursement from the manufacture is the net profit for the dealer even if the car is sold at only the invoice price. The dealer will probably not provide you a further discount below the invoice price, but be aware and negotiate.

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How this scam happens: You purchase a new car, sign all paperwork and drive home with your new car. About a week later the car dealer calls and informs that he was able to get a better deal for you a lower monthly payment and less APR. All you have to do is go back to the dealership and resign the documents.
You go down to the car dealer to re-sign the paperwork, and this is where a scam occurs. You discover that the dealer changed your loan from 48 months to 60 months, or even 72 months. In fact, what the dealership did was increasing the APR on you and not lowering it like they lied. The dealership spread out your loan over more months, which lower the monthly payment. This commonly used tactic tricks you into thinking you are saving money when you’re getting ripped off. Most of the consumers believe their car dealer and think they are actually paying lower APR.
However, when most lenders increase the number of months in the loan, the APR goes UP, not down. You can easily notice this if you look at their rate card. The salespeople who pull this scam sometimes make buyers re-sign the paperwork and don’t give them copies, and the buyer finds out later on the car dealer lied about the “reduced APR”.
How to avoid the scam: If the car dealer calls you and offers a lower rate simply let him know that you are happy with your car loan. If you want a lower rate consider refinancing the your car loan. 

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Many consumers consider buying a car as one transaction, but it’s, and car dealers know this. Actually, there are three transactions, which include the new car price, the trade-in value, and the financing. And all these three transactions are viewed by car dealers as ways to make profit.
Make sure you treat each of these transactions separately and negotiate each one of them. If you get a new car for $200 over invoice, but only receive $1,000 for a trade-in car that’s worth $2,500, you haven’t done as well as you could.
Before going to the dealer do a research about each part of the transaction. Get as much information as you can. Don’t think of the dealer’s finance department as your loan agent. Arrange your financing yourself. Remember, if the car dealer finds you the best rate he will most probably add to the number by serving as the middleman.

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Under California Law the consumer may cancel the contract to purchase or lease of a new or used vehicle for numerous reasons. Basically, California consumers are allowed to cancel an automobile purchase or lease agreement if it is based upon dealer fraud, mistake, or significant non-disclosure or concealment. The basic concept is that there must be a “meeting of the minds” in order for a contract to be valid.
A contract that is put in writing tends to eliminate significant “he said-she said” arguments over what exactly was agreed to, since the significant terms of the contract are usually contained in the writing. Pursuant to California law the contract should have no blank spaces when signed, and that the consumer receives a copy of any contract or document regarding the vehicle after signing.
California law also provides consumers with strong protections against misrepresentations, which may happen during the negotiations for the purchase or lease of vehicles. The consumer is not required to proof that the salesperson intended to make a misrepresentation. The fact that the misrepresentation was made during the negotiations or sales is all that is required.

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There are numerous types of misrepresentation, but the most commonly used are the following:

1. The dealer may inform you that the vehicle is new, when in fact it is used or reconditioned. Remember, that if the vehicle has several miles on the odometer, it was not likely a “new” vehicle.
2. The dealer may also give inaccurate representation concerning the quality or benefits of the vehicle.
3. Often, the dealer will fail to disclose information regarding the history of the vehicle. For example he may hide that the vehicle was a “demonstrator,” was previously totaled due to body damage or flood, has a salvaged title, was a previous “lemon law buy-back”, was involved in an accident involving damage to the frame and any other problem concerning the vehicle which he is required to disclose.
4. Car dealers will try to get you in a deal and purchase a car “As-Is“. In this case any problem that you may discover after the purchase is your problem, not the dealer’s. The sale of the “As-Is” vehicle may be based upon misrepresentation of the vehicle, its mechanical condition and basic safety features as brakes, brake lights, turn signals, lights, etc. Remember that car dealers are required to perform safety check on the used vehicles, to make sure the vehicle is safe.
5. The most commonly used type of misrepresentation can be found at any used car dealership catering to individuals with bad credit, who are often persuaded to buy pieces of junk for over-inflated sales prices and interest rates. Consumer with bad credit score think that no one else will sell them a car and agree to pay large down-payments on useless vehicles so they can get to work and pay their bills. However, later they discover that they spend huge amount of money on repairs to a vehicle that should be retired.

We have listed only a few examples of dealer misrepresentation. If you think that the car dealer misrepresented the vehicle during the sale process contact a qualified dealer fraud attorney for a consultation.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]

If you are thinking about buying a new vehicle you should be aware that car dealers and finance companies defraud the consumers in many ways. Below is the list of most commonly used tactics. Remember, that not all of these are considered to be fraud.

• Phony contests or “specials”
• False advertising
• Being charged more than the advertised price
• “Yo-yo” deals, in which the dealer requires a second loan agreement
• Bait & Switch – on price, year, model, new versus used, or finance terms
• Switch from sales to lease financing
• Fraud concerning negative equity in the trade-in
• “Stealth credit check” during the test-drive
• Failure to properly value or credit the trade-in
• Keeping customers captive in the finance department
• Misrepresentation of title
• Misrepresentation of vehicle history
• Selling prior lemons without disclosure
• Premature sale of the trade-in
• Selling prior salvage vehicles (wrecks) without disclosure
• Due bill fraud
• Selling gray market vehicles without disclosure
• Dealer kickbacks from lenders based on interest rates
• Selling prior daily rental vehicles without disclosure
• Negotiating contracts primarily in Spanish, Vietnamese, and certain other languages, without providing a written contract in the primary language.
• Failure to make certain finance disclosures in auto leasing
• Loan packing (adding unwanted products to bump monthly payments)

If you believe you are victim of any of the above mentioned contact us.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]

Consumers are protected from different deceptive practices used by car dealers by a number of federal and state laws. Today auto dealer fraud is a very broad area and may occur during purchase and financing of the vehicle. There are many different types of auto fraud and claims are against insurance companies, car dealers and manufacturers, extended warranty companies, service contract companies and car finance companies.
One common type of auto fraud is the sales of salvage, flood and prior rental cars without disclosure of their past history. The sale of vehicles with a rolled back odometer or without disclosing the true mileage is illegal. It is also illegal to sell an unsafe vehicle.
Under California law the car dealer must give the consumer a translation of the filled out lease or purchase contract in the language the consumer negotiated the lease or purchase of a vehicle: Spanish, Chinese, Vietnamese or Korean languages. This must be done before the consumer signs the lease or purchase.
In the event the dealer fails to comply with this law, the consumer has the right to undo the purchase or lease and get money refund. If you have recently purchased a vehicle from a California dealer and you believe that there is something wrong with the purchase, finance, or lease of your vehicle, or you think that the vehicle you bought has inaccurate odometer reading contact a dealer fraud attorney immediately.

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[ To Learn more our services and areas of practice, please visit our website at www.DealerFraud.org]