Dealer Fraud

If you believe that you may be an auto dealer fraud victim, there are a number of steps you can take to enforce your legal rights. You have the following options:

Contacting the Dealer. In many states, if you believe that car dealer fraud was committed, you are required to contact the dealer and give them a chance to correct the problem before taking any legal action (such as filing a lawsuit). This contact may be initiated by you personally, or it may be made by your attorney, but it should be in writing and should clearly illustrate both the problem (i.e. the dealer’s failure of disclosing certain financing charges), and what steps you would like the dealer to take to resolve the problem (i.e. a partial refund of the vehicle purchase price).

Filing a State Agency Complaint. If you believe that you may have been an auto dealer fraud victim, you may want to file a complaint with a state agency that protects consumers’ rights in connection with vehicle purchases. It may be a consumer rights protection division of the state attorney general’s office or an agency specifically designated to handle complaints regarding auto dealers.

Getting an Attorney’s Help. If you recently bought a vehicle and you suspect that the dealer may have committed fraud during the sales process, you may want to speak with an experienced auto dealer fraud attorney. An auto dealer fraud attorney will evaluate your case and explain all your options - including what you can expect if you decide to file a lawsuit against an auto dealer - and will work with you to ensure the best possible outcome for your case.

This is a very common car dealer scam designed to rip off people with bad credit. It is also referred to as the Spot Delivery scam.

While you are at the car dealership you may be told that you have excellent credit and got a good APR on the loan. Then they hand you the keys to your new car, tell you the sale is subject to loan approval and so you drive happily off.

A few weeks later you get an unexpected phone call from the car dealership letting you know that the loan fell through because you didn’t qualify for the interest rate that you thought was guaranteed. So they ask you to come back to the auto dealership to work it out. If you fall for this car scam be prepared to pay a much higher interest rate.

The dealership knows exactly what interest rate you qualify for and how large a loan you can get. They knew you had bad credit long before you drove off. They knew that even though you could get a loan the APR would be high. The result: you would either purchase a less expensive car or decide not to get a car at all. You want the car badly… if the price is right. The salesman is well aware of this. He or she also knows your credit score and wants to make the sale any way they can.

If you believe that you’ve been a victim of a Yo-Yo financing scam you should immediately report the car dealership to your state’s Attorney General Office. You should also contact the Better Business Bureau in order to report a dishonest dealership. You can also try to find better financing with a better interest rate as fast as you can.

“Throwing a lowball” is a car dealer tactic when a customer is offered a very good price on a car, perhaps as much as $500 below competitors prices. However, the good deal is not genuine; its only purpose is to cause a prospect to decide to buy at this dealership and not from the other dealers. Once the decision is made, purchase forms are filled out, extensive financial terms are arranged.

Then something happens. All of a sudden an “error” in the calculations is discovered; e.g. the salesman might have forgotten to add in the cost of the air conditioner and if the customer insists on having it, then $500 must be added to the price…

The cover up operation is played sophistically, sometimes they let the bank handling the financing find the “mistake”, other times the boss is not approving the deal because “we’d be losing money”. They make it look as if it’s not that big mistake as it’s only a relatively small percentage of the price of the car and as they stress out it only brings it to be equal to competitors.

The most interesting thing about the lowball tactic is its ability to make a person feel pleased with a poor choice.

Until all the papers have been signed there are still ways in which a shrewd dealer may add to his profit by talking you into extras you don’t want and probably don’t need. These can include added and overpriced insurance, rust proofing, extended warranties, paint or fabric protection, anti-theft plans, and more. Smile and firmly turn them all down.

Finally, before you drive away, make a careful inspection of the car. If you’re not happy, get a written agreement. It means you have the right to return the vehicle later in order that flaws can be corrected.

Read our blog if you want to be able to detect any hidden defects on the vehicle and be protected from becoming a victim of dealer fraud.

Windows

• See if there are any hairline cracks or tiny holes in the glass.
• Make sure that they move up and down smoothly and if they fit snugly when fully rolled up or down.

Tailpipe

• Check if the vehicle’s tailpipe is damaged from poor reversing.
• Examine the rear bumper for too much soot from the exhaust.  If the tailpipe has black gummy soot, this may be an indication that the engine has worn rings or bad valves, which could mean expensive repairs.

Tires and Shock Absorbers

• Check the tires (don’t forget the spare) if they are unevenly worn as this may indicate either bad alignment or worse - damaged suspension.
• Put your full weight on a corner of the car and release - if the car keeps rocking up and down, be wary about the condition of the shock absorbers.

Interiors

• Check if the car’s steering wheel points straight when the wheels are aligned ahead.
• Check the upholstery for cigarette burns, stains, rips or scuffs.  Low mileage readings but too much worn out driver’s seat and brake and accelerator pedals could be an indicator of odometer rollback.
• Musty smell, moisture inside the trunk, dirt under the mat and watermarks on the interior panels of doors are likely indicators of flood damage.

Lights and Mechanical Devices

• Make sure the lights, heater, air conditioner, windshield wipers, radio and other accessories work properly.

We hope this blog and one of our previous blogs Tips to Detect Hidden Defects in a Used Car (1) will help you to avoid car dealer scams.

The credit score scam

This scam is designed in the following way. The finance manager gives you some misleading information about your credit score telling you that it is lower than it really is so that they can get you for higher interest rates.

This scam is comparatively easy to avoid. Just get your own copy of your credit report and bring it with you.
It is not easy to lie to you about your credit score in case you have your own copy of it. If your paper and theirs doesn’t contain the same thing, go somewhere else because that dealership is lying to you.

The Dealer Prep Scam

Basically the dealer will tell that you have to an extra $500 to cover the labor costs of the dealership’s 5-point inspection.

You are paying for the amount of time it took for the dealership to make sure that the car wouldn’t explode on you in the first week of owning it. This check up is for the dealership to remove plastic from the seats, vacuum the car out, make sure that all of the fuses and fluids are ready to go, etc.

When factories deliver new cars to the dealerships the cost of delivery and prep is already covered, so basically you are paying the dealership for work that they haven’t really done.

You can avoid this car dealer scam by plainly asking the dealership to add an extra $500 credit to the deal to make sure you do not have to pay the money. If they refuse, then you can decide if the car is worth the money or not. If you believe that it is worth, buy the car; if not, go to another dealer that will remove the dealer prep costs.