Dealer Fraud

This is one of the commonly used dealer ticks now. It doesn’t matter when or even which dealership you go, the dealer will always make the customer believe he/she is “lucky” and assure he consumer that they can offer the lowest price.
If you go to the dealership early in the month, the salesperson may tell you he missed his target last month and should try to make it up. In the middle of the month the dealer will probably tell you that the boss ordered him to sell more cars otherwise he will never reach his target for the month.
Remember that these are simply dealer tricks that make you get into the deal. Beware of this dealer fraud if you don’t want to end up paying more for a car than you expected.

Today there are many fraud dealers in the industry who are ready to scam you or taking advantage of you. Each of these dealers is well acquainted with tactics to be used to scam the buyer. All they care about is making as much profit out of buyers as possible by selling them a wrong car using their oily tongue. Thus some car deals leave customers with illegal cars.

Be aware of such dealers. One of the fraudulent practices they use is rendering a new look to an accidental car and selling these cars to consumers. Some of the strategies employed by such dealers are:

The car dealer makes changes in the car’s odometer. They reset the odometer so that it has a fake odometer reading and the car appears to travel less miles than it originally had. This dealer trick increases the value of the car. However you can still ensure the originality of the car by looking for tale signs such as wear and tear to the pedal rubbers and seats.

To avoid the possibility of buying a fraudulent vehicle first have it inspected by an independent vehicle inspector.

One of the most commonly used dealer tricks is when the car dealer agrees with the mechanic to undervalue your trade in car. If you think you can get more for your trade-in, you will try to just get a clever salesperson that might give in and agree to an excessive price for your trade in. However, what the dealer will do is to look up on the computer or in the Car Dealers Price Guide to find out the going price for your trade in and will start from there. Be wary not to end up shouldering all the car costs in the end. This generally happens when the car dealer charges too much for your new car.

Let’s say the car dealer. When you have already negotiated all the details with the dealer he will contact you before your new car is delivered and inform you that there is an issue with the trade in. The dealer will ask you to bring the car into the workshop for further inspection. Typically your vehicle will stay in the garage for 60 minutes, although nothing will be done to it. After this the salesperson will let you know that the mechanic claims to have found your trade-in is really worth $500 less than what they have offered for it. In case you give in and agree your used car is really worth less you’ll become a victim of an auto fraud and the salesperson will make extra $500 profit.

Not long after flooding, cars damaged by water appear on the market. It is common practice private sellers, auto auctions and some car dealerships to sell flood-damaged cars after the vehicles dry. Many consumers may not notice the flood signs without close examination by an experienced eye. In many states, individuals and car dealers are legally obligated to disclose that the car they’re selling has previous flood history. The problems of a flooded car may include rust and damage to major mechanical parts as well as damage to sensitive electrical systems.
Here are several tips to help consumers spot flood-damaged vehicles:

• If you consider purchasing a used car, first have it inspected by a qualified mechanic.
• Check if the vehicle comes from a state ravaged by floods and ask to see the title of the used car you intend to buy. Walk away from the deal if “salvage” is stamped on the title.
• Always get a vehicle history report from an online service such as CarFax or Autocheck. These is the best way to find out where a vehicle’s been and what’s happened to it.
• Check for signs of water.
• Test everything related to the car’s electrical system, for example the lights, windshield wipers, turn signals, heater, air conditioner, and cigarette lighter several times to make sure they all work.
• Look for signs of mud, rust or water damage in the under the seats, trunk, and glove compartment.

The first thing you should do if you believe that you have been a victim of an auto financing scam is to report the car dealership to your state’s attorney general office. Another thing you may want to do is contacting the Better Business Bureau to report the dishonesty of the dealership. It would be a good idea to get better financing with a lower interest rate as soon as possible. Going from 17% to 8% could mean saving yourself hundreds of dollar per month, and thousands of dollars over the entire term of the loan.

Remember, that there are lots of consumer fraud schemes out there and one of them is the bad credit car financing scheme. Each consumer should educate himself/herself to recognize what is and is not legitimate. Be informed and you can minimize becoming a victim to this form of fraud.

*Rolling back the odometer.
*Not disclosing that the car is a “lemon buyback” that the original owner returned for a refund.
*Not disclosing that the vehicle has a “salvage title.”
*Not disclosing that the vehicle used to be a rental, a demonstrator or was previously sold and  returned.
*Quoting a lower price than the one on the contract, or charging you for features you were told  were free.
*Contracts that are incorrectly dated, forged or not provided to you.

Victims of used car fraud should go to the dealer first to ask for a refund or exchange (or any service you’re entitled to under a contract or warranty). If the dealer won’t play fair, you may have to file a lawsuit to get your money back. You have three years from the day you bought the car to bring such a claim. In a used-car fraud lawsuit, you can recover what you paid for the car and all of its repairs, any money you paid for alternative transportation and other costs caused by the lemon, attorneys’ fees, and anything else the court thinks is fair. In cases of extremely illegal behavior by dealers who knew better, you may be able to get punitive damages, which are designed to punish wrongdoers financially, as well.

When buying a used car some legal rights arise in California.You are allowed to bring a lemon law claim even if the vehicle is fairly new and its original manufacturer’s warranty may still apply and will allow you to bring a lemon law claim. If the vehicle came with a dealer’s warranty, you can also bring a claim that the warranty has been violated. If the vehicle came with no warranty,that is, if it was sold “as is”or with a service contract, you may still be able to bring a claim for used car fraud.
Used car fraud is forbidden by the California Consumer Legal Remedies Act, which prohibits used-vehicle dealers and most other retailers in California from using unfair and deceptive business practices to sell their goods. That means dealers may not lie to or mislead customers. They are also legally obligated to disclose any material defect in the car, which includes a past wreck or a former life as a rental. If you ask a question, dealers must tell the truth, even if the truth is that they don’t know the answer. If dealers are advertising their cars as fully serviced and inspected, they have a legal obligation to actually inspect it, fix material defects and disclose any remaining problems. You also have the right to get the car inspected before you buy.

A fairly frequent question pertains to the public’s ability to check the status of a California Dealer’s License.  Dealers, including boats, motorcycles, trailers, motorhomes, cars and trucks are all licensed by the DMV.  The problem many consumers have is they are simply unaware of the jargon needed to check the status of a dealer’s license.

Occupational Licensing

Within the DMV is a small cadre of people that handle Occupational Licensing (OL). They are responsible for dealers, dismantlers, brokers, driver training instructors, traffic violator school instructors, manufacturers, transporters, ATV School instructors, and so forth.  They have a pretty big job, as this industry sector in the California economy is huge.  If you can work your way through to them on the telephone or navigate the website, then you will likely find the information you’re looking for.

Online License Check

However, if you need a “quick check” on the license of a dealer (or anything listed above), then you can use the DMV website.  Here is the direct link to the license check (or at least the disclaimer page that you have to agree to before using the site):  https://mv.dmv.ca.gov/olinq2/legal.do

There is an unfortunate phenomenon in the auto industry that has trickled down from the housing crash – voluntary vehicle repossessions are on the rise.  I was thinking about this when there was an article in the local paper that quoted a bankruptcy judge as saying, “I’ve never seen so many people so willing to walk away from their homes.”  The same is true in the consumer auto industry right now.

The cause of this is the same as the cause of the housing crisis.  It’s not that the lenders were more willing to lend money; it is because the lenders trusted the “brokers” that arranged all the financing – in the case of the auto industry, it’s the dealer.  Here’s how that works:  Consumer comes into the dealership and gets “sold” a car that’s really out of their payment range.  The salesperson will either fill out the credit application for the customer, or have the customer fill out the credit application but tell him/her to “leave the monthly income line blank.”  The dealership will then fill in the amount necessary to get the consumer qualified for the vehicle loan and the lending institution, trusting the dealership, will not ask for stipulations (or “stips”), such as proof of income:  check stubs or income tax returns.  To the bank, it looks like the customer can afford the car.  To the customer, they are just excited to be financed for the vehicle.  This is especially true for consumers with “marginal” credit.  I see the ads stating that the national average credit score is “692” or whatever, and I don’t know whether that’s true.  What I do know is that consumers with scores in the low 600’s are the most vulnerable to this type of fraud because they are the most happy just to obtain vehicle financing.  Then, 5 months later, when the insurance, monthly payments, fuel and everything else finally sinks in, they realize that they just can’t afford the vehicle – which the bank would have known in the first place had the dealer not “embellished” the income on the credit application.

If you can’t afford your vehicle, you have VERY LIMITED options!  Unless you put a bunch of money (or trade equity) down toward the purchase, you are not likely to be in a position of equity.  You can’t just sell yourself out of the vehicle.  I have not heard of any auto financing institutions offering a “short sell” option, like housing lenders currently are, so you are pretty much stuck.  However, there is a paper trail leading from the dealership to the bank.  If you find yourself in the set of circumstances I’ve outlined above, you should call the bank and request a copy of the credit application that was submitted on your behalf.  If there are irregularities, then you should contact an attorney.