Dealer Fraud

Also be cautious of the trade-in price being offered to you inasmuch as this represents a dealer’s greatest potential profit on the transaction. Because it is difficult to determine the value of the trade in vehicle, even by resorting to such things as the Kelly Blue Book and web sites and information to help you determine the price of your used vehicle, most consumers will be willing to accept a lower trade-in than what the vehicle is actually worth. Psychologically, once you are tempted to buy that new car your resistance has pretty well been lowered and you are more likely to accept a bad deal in your trade. The dealer will lead you to believe that they are actually providing a service to you by taking your old car off your hands. One way to get around this is to agree on the trade in price before negotiate for that new car so as to avoid getting caught in such a trap.

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One of the favorite tricks of salesmen and dealerships is the old "bait-and-switch" which is still as effective as ever. Typically a salesperson will tell you all the things wrong with a model that you had carefully researched and were intent on buying or leasing. Do not be dissuaded by such attempts to "educate" you. The only purpose for a salesman to provide such disparaging information is to induce you to trade up to something which is more expensive and which provides more profit to the dealer.

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Be wary of any dealer who states that they are compelled to charge a certain price because their lenders or the leasing company will not allow them to sell below a stated price. In reality, lenders and leasing companies have no control over the car’s selling price and this is merely a convenient excuse to charge more and defend against your request for further reduction in the price. You should also be aware that the extended warranty or service contract that some dealers insist that you purchase, is not a requirement of the lender or leasing company but rather merely another means for the dealer to sell you an added "option."

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First, you should understand that the dealer has the advantage of a "holdback" whereby the dealer actually pays from 1% to 3% less than the invoice price which may be shown to you by the sales manager. Although the dealer does buy the vehicle from the manufacturer at the stated price on the invoice, after the car is sold the manufacturer provides a rebate to the dealer for the costs of maintaining that vehicle in its inventory for a period of 90 days. Inasmuch as most vehicles are sold more rapidly, i.e., within 90 days, some part of that rebate or reimbursement from the manufacture becomes bottom-line net profit even if the car is sold at only the invoice price. Although it is not realistic to expect that you will also be provided a further discount below the invoice price, it will help you to better understand and negotiate the deal being aware of this.

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Bone-Us Scam: About a week after you drive home with your new car, the car dealer calls you up and says "Great news! We were actually able to get you into a better loan with a lower monthly payment and less APR! Just stop by our dealership when you get a minute, and resign the papers to get your lower payment."
You go down to the car dealer to re-sign the paperwork, and this is where a huge red flag should shoot up for you: You notice that they changed your loan from 48 months to 60 months, or even 72 months. What they did in reality was INCREASE the APR on you not lowers it like they lied. Then to mask their crime, they spread out the loan over more months, which lower the monthly payment, tricking you into thinking you are saving money when you’re getting ripped off. Yes there are people out there who believe the car dealer and think they are actually paying lower APR. This does not even pass the common sense test either and here is the crucial point: With most lenders, if you increase the number of months in the loan, the APR goes UP, not down, just look at their rate card! Make sure you point that out to them. 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 they call you later, say "No thanks, I like my payment the way it is." Tell them to fax or email it to you in writing first to review it for unexpected changes. Better yet don’t answer the phone. Want a lower rate? Refinance your car loan, or send extra principle monthly, it has the same effect.

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Many people view buying a car as one transaction. It’s not, and car dealers know this. “There’s really three transactions rolled into one — the new car price, the trade-in value, and the financing,The car dealer sees all three as ways to make money.”
Treat each of these as separate transactions, and negotiate each one. 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.
“You need to manage all parts of the process by doing research ahead of time, It’s very important that buyers not think of the dealer’s finance department as their loan agent. The car dealer is not required to find you the best rate, and might add to the number by serving as the middleman.”

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California Law provides a myriad of reasons to justify rescinding a contract to purchase or lease a new or used automobile. Basically, California allows an automobile purchase or lease agreement to be rescinded 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. California law requires that the contract have no blank spaces when signed, and that the consumer receive a copy of any contract after signing.
However, California provides consumers with vast protections against misrepresentations that are made during the negotiations for the purchase or lease of goods or services. Further, there is no requirement that the salesperson intended to make a misrepresentation; the fact that a representation was made during the negotiations which in fact is not true is all that is required.

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The inaccurate representation that the vehicle (or other consumer product) is new, when in fact it is used or reconditioned (if your "new" vehicle had several hundred miles on the odometer, it was not likely a "new" vehicle);
Any inaccurate representation concerning the quality or benefits of goods or services (this would usually cover anything told to you by the finance or sales manager, including how mechanically sound the used car is, how much you’ll be protected by the service contract, that the finance rate is the best available, etc.);
Significant non-disclosures of information required to be disclosed (such as the fact 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 a whole host of other problems which should have been disclosed but were not.
Often, used car dealers will attempt to persuade you that you bought it "As-Is", and therefore whatever problem you are experiencing is your problem. However, this is not true with respect to most problems discovered soon after the sale, since the buyer’s decision to buy "As-Is" was usually based upon some representation made about the vehicle that proves not to be true. The most basic of these misrepresentations concerning the mechanical condition of a used vehicle center on the requirement that the DMV requires all dealers to have a basic safety check performed on the vehicle to verify that the vehicle is safe to operate on the road, as it has such basic safety features as brakes, brake lights, turn signals, lights, etc. Invariably, this "safety" check is described by the salesperson as the service department having gone over the entire vehicle with a fine tooth comb, and found it to be in superior mechanical condition good for at least another 100,000 miles.
The most egregious examples 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. These poor individuals think no one else will sell them a car, so pay large down-payments on useless vehicles so they can get to work and pay their bills, only to find out their car payment money is being spent making repairs to a vehicle that should be retired, with the end result that the car gets repossessed, and, you guessed it, sold to the next poor individual with poor credit.
The above are just a few examples of facts which would justify rescinding a sale, and you are encouraged to call us for a consultation. Undoubtedly, if you feel you were significantly misled, you probably were!

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The ways in which car dealers and auto finance companies defraud the consumer are many. Here is a list of things to watch out for. While not all of these items constitute fraud, by themselves, these are all “red flags” signaling potential misconduct. If you purchased your vehicle in California and think you may be a victim of Auto Fraud, we can help contact us .

Auto Fraud,Red Flags,False advertising,lease financing,vehicle history,salvage vehicles,rental vehicles without disclosure, finance disclosures,auto leasing,loan agreement, bill fraud

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There are a number of federal and state laws designed to protect consumers from the many deceptive and unsavory practices used in connection with purchasing and financing an automobile. Automotive fraud is a very broad area. There are many different types of auto fraud, and the defendants include: insurance companies, car dealers and manufacturers, extended warranty companies, service contract companies and car finance companies.
Examples of auto fraud include sales of salvage, flood and former rental cars without disclosure of their past history. It is illegal to sell a vehicle with a rolled back odometer with disclosure of the true mileage. It is illegal to sell an unsafe vehicle.
California law provides that if the consumer negotiated the lease or purchase of a vehicle primarily in the Spanish, Chinese, Tagalog, Vietnamese or Korean languages, the dealer must give the consumer a translation of the filled out lease or purchase contract in the applicable language. This must be done before the consumer signs the lease or purchase.
If the dealer fails to comply with this law, the consumer may undo the purchase or lease and get his or her money back. If you think you have been deceived in any way in conjunction with the purchase, finance, or lease of your car or truck, or if you purchased a vehicle from a California dealer with an inaccurate odometer and the dealer did not disclose that fact contact us .

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