Dealer Fraud

One of the most recent car dealer ploys is Mandatory Arbitration.

Mandatory Arbitration or Conflict Resolution: This ploy sounds reasonable at first, but be very cautious…

After everything else has been agreed to, the sales person asks you to sign a “Dispute Resolution” or “Conflict Resolution” agreement. The sales person tells you it just says that if a problem occurs, you agree to settle through arbitration and not take the car dealer to court.

Although arbitration can certainly be a reasonable option, the fine print is where the problems lie.

The agreement may well say that the car dealer chooses the arbiter… and/or that you pay the entire arbitration fee (regardless of who wins)… and/or that you cannot appeal the decision but the car dealer can. It also often includes a clause that you can’t participate in any class-action lawsuits against the dealership — no matter what they do!

So, make sure you read any arbitration agreements before you sign them to make sure they are fair, and show them to your attorney.

In fact, we recommend that you ask the car dealer whether or not they require an arbitration agreement BEFORE you look at any cars. If they do require a dispute resolution agreement, check out the fine print first, and if it has the provisions we’ve just described, shop elsewhere.

Many sleazy car dealerships require these agreements because they’d get sued frequently without them.

Car dealers are constantly thinking of new ways to make more profit and take advantage of car buyers. One of the most recent and commonly used car dealer tricks is Spot Delivery.

Spot Delivery occurs when the consumer has chosen the car, filled out all the paperwork and the car loan application with the car dealer’s finance department. The car dealer will tell the consumer that although the car loan hasn’t been “officially” approved yet, the consumer can drive the car home.

However when the consumer does so the dealer calls a few days later and lets the consumer know that the car loan wasn’t approved at the interest rate previously discussed. The dealer will also tell that the buyer was approved at a higher rate.

Thus, the consumer will most likely have to pay thousands of dollars more than he/she expected. When the consumer tries to walk away from the deal the car dealer will probably inform that they already sold your trade-in so you have no options. The dealer will also tell you that they will sue you if you don’t agree to the new terms. Check your loan agreement. If it includes a “writ of rescission,” which means that you agreed to pay a higher interest rate if you did not qualify for the original loan then you are probably stuck.