Dealer Fraud

Often a customer won’t qualify for financing under the terms of the first purchase contract and may be required to increase a down payment, APR, etc. to quality for a loan. The dealership then has the customer sign a second contract with the new terms but backdates it with the date of the first contract, sticking the customer with financing charges for a period during which the contract wasn’t yet in effect. In addition to making a material misrepresentation of when the customer takes the obligation of the new contract, a backdated contract often violates the single document rule because another form, usually called “Acknowledgment of the Rewritten Contract,” has the actual date when the contract was signed. In addition, many customers aren’t informed that they can opt to cancel the contract and return the new vehicle and have the down payment and trade-in vehicle refunded, rather than signing a second contract with less favorable financing terms.

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