Dealer Fraud

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. Auto 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.

Few things are more annoying in the purchase of a vehicle than to find out that it has sustained prior accident damage. In many states, it is illegal to sell a new vehicle that has sustained some form of body, structural, collision, or other damage up to a certain percentage of the manufacturer’s suggested retail price for the vehicle without first disclosing the prior damage to the buyer. It is also generally considered illegal to sell an unsafe vehicle, to make affirmative misrepresentations about a vehicle, new or used, or to lie to a consumer in response to questions asked about a vehicle.

So, for example, if you ask a dealer whether a vehicle has been in a prior accident and the dealer denies any knowledge while being aware of a prior accident on the vehicle, that misrepresentation can be auto fraud. Likewise, if a dealership fails to disclose material damage, even if previously “repaired,” this can also be fraud.

If you notice any problems in the appearance or performance of the vehicle, the best way is to have it inspected by a body shop.

Few things are more aggravating in the purchase of a vehicle than to find out that it has sustained prior material accident damage. It is illegal to sell a new vehicle with any unrepaired damage, any structural damage or even if repairs were made costing more than 3% of the vehicle’s value. Vehicles sold as Certified Pre-Owned vehicles, meanwhile, must live up to the dealership’s advertised certification standards. It is always illegal to sell an unsafe vehicle, and if you asked specific questions about a vehicle, new or used, the dealer is obligated to provide truthful responses (to the best of his knowledge).

So, for example, if you ask a car dealer whether a vehicle has been in a prior accident and the dealer, that misrepresentation can be auto fraud. Likewise, if a dealership fails to disclose material damage, even if previously “repaired,” this can also be fraud.

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

Motor vehicle dealerships know that under the law they must disclose material damage to a buyer and must disclose any previous accident damage to a buyer. If you ask an automobile dealership whether a vehicle has been in a prior accident and the dealership lies or if a dealership fails to disclose material damage, even if previously “repaired,” these acts are considered fraudulent.

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[ To Learn more our services and areas of practice, please visit our website at

www.DealerFraud.org]