Dealer Fraud

Though there are no laws that require a dealer to check a car over before selling it, the buyer’s guide states that the car is supposed to have a post on the window stating if the car has a warranty or is sold “As Is.”

The car dealer is supposed to offer a consumer to sign a copy of the Buyer’s Guide and give the car buyer a copy of it. If the car buyer have signed the Buyer’s Guide and have a copy of it the buyer will probably have no recourse, because the dealer can say it was posted on the car and no fraud occurred.

The customer may have a dealer fraud case if he/she hasn’t signed the Buyer’s Guide. Consult with an attorney if you believe you are a victim of dealer fraud.

California Law provides a number of reasons to justify rescinding a contract to purchase or lease a new or used automobile. In other words, California allows an automobile purchase or lease agreement to be rescinded if it is based upon fraud, mistake, or significant non-disclosure or concealment. The basic concept is that there must be a “meeting of the minds” in order for a contract to be valid.

A contract that is put in writing tends to eliminate significant “he said-she said” arguments over what exactly was agreed to, since the significant terms of the contract are usually contained in the writing. California law requires that the contract have no blank spaces when signed, and that the consumer receive a copy of any contract after signing.

However, California provides consumers with vast protections against misrepresentations that are made during the negotiations for the purchase or lease of goods or services. Further, there is no requirement that the salesperson intended to make a misrepresentation; the fact that a representation was made during the negotiations which in fact is not true is all that is required.

Some examples of misrepresentations justifying rescinding the sale, may include the following:

• The inaccurate representation that the vehicle (or other consumer product) is new, when in fact it is used or reconditioned (if your “new” vehicle had several hundred miles on the odometer, it was not likely a “new” vehicle);
• Any inaccurate representation concerning the quality or benefits of goods or services (this would usually cover anything told to you by the finance or sales manager, including how mechanically sound the used car is, how much you’ll be protected by the service contract, that the finance rate is the best available, etc.);
• Significant non-disclosures of information required to be disclosed (such as the fact that the vehicle was a “demonstrator,” was previously totaled due to body damage or flood, has a salvaged title, was a previous “lemon law buy-back”, was involved in an accident involving damage to the frame, and a whole host of other problems which should have been disclosed but were not.
• Often, used car dealers will attempt to persuade you that you bought it “As-Is“, and therefore whatever problem you are experiencing is your problem. However, this is not true with respect to most problems discovered soon after the sale, since the buyer’s decision to buy “As-Is” was usually based upon some representation made about the vehicle that proves not to be true. The most basic of these misrepresentations concerning the mechanical condition of a used vehicle center on the requirement that the DMV requires all dealers to have a basic safety check performed on the vehicle to verify that the vehicle is safe to operate on the road, as it has such basic safety features as brakes, brake lights, turn signals, lights, etc. Invariably, this “safety” check is described by the salesperson as the service department having gone over the entire vehicle with a fine tooth comb, and found it to be in superior mechanical condition good for at least another 100,000 miles.
• The most egregious examples of misrepresentation can be found at any used car dealership catering to individuals with bad credit, who are often persuaded to buy pieces of junk for over-inflated sales prices and interest rates. These poor individuals think no one else will sell them a car, so pay large down-payments on useless vehicles so they can get to work and pay their bills, only to find out their car payment money is being spent making repairs to a vehicle that should be retired, with the end result that the car gets repossessed, and, you guessed it, sold to the next poor individual with poor credit.

These are just a few examples of facts which would justify rescinding a sale, and you are encouraged to call us for a consultation.

It is not uncommon for a dealer to try to sell you a car that has been wrecked, telling you that it is in great shape. Often dealers will sell such cars with the federally required “As Is, No Warranty” sticker on it which means you cannot return the car because you agreed to accept any damages. If you intend to buy an as-is vehicle try to get at least a 30 day warranty from the dealer. Also check the car through CarFax.

Another form of fraudulent advertising occurs online, when car sellers put up ads for a car at a price much lower than similar vehicles. During the purchase process they want you to use an escrow service they recommend. However, it turns out that the escrow company is their own company, and once you wire the money, there is no way to get it back. Avoid this fraud by never using the escrow service recommended by the dealer.

Dealers may advertise that they can get you out of your current lease or loan. However, in reality the dealer pays off your lease or loan, and then adds that amount to your new lease or loan. They then spread out the payments so that you don’t notice you are still paying for your previous car, as well as your new car, and have twice the debt you had before.

According to the requirements of federal law every used vehicle offered by a dealer (dealer is anyone who sells more than five vehicles a year) must have a Buyers Guide posted inside.

Buyers Guide should include the following:

* Whether the vehicle is sold “as is” or with a warranty.

* A declaration of what percentage of repair costs a dealer will pay if there is a warranty.

* A reminder that spoken promises are difficult to enforce.

The Buyers Guide becomes part of the sales contract and should reflect any negotiated changes. It also rules in case of a conflict.

One of the forms of auto fraud that is widely used by car dealers is the misrepresenting the true condition of the vehicle. The dealer may tell the customer that the vehicle is in excellent condition and the customers believe this just because the vehicle is cosmetically clean and mechanically sound. Unfortunately, this is not always the truth. Be extra cautious if the vehicle you intend to buy comes without a warranty or “as is.”

Vehicles that have been wrecked, declared a total loss by an insurance company, or rebuilt have a salvage title. The title of the vehicle must disclose that the vehicle is salvage. Car dealers must disclose any salvage history to the buyers. The price of a salvaged vehicle is generally much less than an equivalent non-salvaged vehicle. Salvaged vehicles may have major safety defects depending on how well it was rebuilt.

There are vehicles that have been wrecked and rebuilt, but were not declared a total loss by an insurance company. These types of vehicles are much harder to identify because they do not carry the salvage title.

Avoid this dealer fraud by having the vehicle you intend to buy inspected by a mechanic and/or an auto body repairperson before you buy it. Always get a vehicle history report. You can get summary title reports from: Carfax (www.carfax.com) and AutoCheck (www.autocheck.com).

If you believe you are a victim of this auto fraud, you should contact a dealer fraud attorney.

There are numerous types of misrepresentation, but the most commonly used are the following:

1. The dealer may inform you that the vehicle is new, when in fact it is used or reconditioned. Remember, that if the vehicle has several miles on the odometer, it was not likely a “new” vehicle.
2. The dealer may also give inaccurate representation concerning the quality or benefits of the vehicle.
3. Often, the dealer will fail to disclose information regarding the history of the vehicle. For example he may hide that the vehicle was a “demonstrator,” was previously totaled due to body damage or flood, has a salvaged title, was a previous “lemon law buy-back”, was involved in an accident involving damage to the frame and any other problem concerning the vehicle which he is required to disclose.
4. Car dealers will try to get you in a deal and purchase a car “As-Is“. In this case any problem that you may discover after the purchase is your problem, not the dealer’s. The sale of the “As-Is” vehicle may be based upon misrepresentation of the vehicle, its mechanical condition and basic safety features as brakes, brake lights, turn signals, lights, etc. Remember that car dealers are required to perform safety check on the used vehicles, to make sure the vehicle is safe.
5. The most commonly used type of misrepresentation can be found at any used car dealership catering to individuals with bad credit, who are often persuaded to buy pieces of junk for over-inflated sales prices and interest rates. Consumer with bad credit score think that no one else will sell them a car and agree to pay large down-payments on useless vehicles so they can get to work and pay their bills. However, later they discover that they spend huge amount of money on repairs to a vehicle that should be retired.

We have listed only a few examples of dealer misrepresentation. If you think that the car dealer misrepresented the vehicle during the sale process contact a qualified dealer fraud attorney for a consultation.

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

Many used cars in the United States are damaged. These damages range from minor body damage to serious frame damage and millions of these cars sold throughout the country each year. Selling damaged cars is a very profitable business for car dealers. Is the car dealer responsible for selling these cars and what is his liability?
The areas of law that govern this liability include the following: Consumer Fraud, Fraud, Breach of Warranty and others.

Fraud
It is very common among car dealers not to disclose the fact that the car was previously damaged. The reason for this fraud is basically the fact that the dealers know that the consumer will change his/her decision to purchase the vehicle. However the law requires the dealer to disclose all the information and truthfully answer to all the questions of the consumer.

Consumer Fraud
The car dealer bears liability under the Consumer Fraud Act if he knew some information about the vehicle, but failed to disclose it to the car buyer. The consumer should prove that the dealer did it intentionally.
The consumer can also file a lawsuit against the dealer for so-called affirmative misrepresentation of fact. For example, the dealer may tell you that the car was not in an accident, but later you discover that it actually was. This is considered to be misrepresentation, even if the dealer didn’t know about it. The dealer is required to give accurate information to the consumer.

Breach of Warranty
The car dealer bears liability if he falsely described the car as no accident or no damage and it served as basis for the purchase. The dealer is liable if the use, value and/or safety is affected the. The liability is very complex and complicated and may be affected by many other factors such as the existence of written warranties, service contracts and “as is” disclaimers.

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

Purchasing a used car in California may be very confusing and complicated today. If you intend to buy a used car do some research and prepare not to become the victim of used car fraud.
If you consider purchasing a used car, these key steps may be very useful:
Step #1: Before you buy the vehicle have it inspected by a qualified mechanic who does not work for the dealership. You are allowed to have the vehicle inspected. If the dealer refuses to let you inspect the car simply walk away.

Step #2: It is very important that you get a written warranty for the car you buy.

Step #3: Pursuant to California law, still have rights even if you bought a used vehicle. If you purchased a fairly new vehicle and it still has the original manufacturer’s warranty, then you may bring a lemon law claim. You may also bring a warranty violation claim if you bought a vehicle with a dealer’s warranty. Even if the vehicle you have purchased was sold “as is” and comes with no warranty, you are still allowed to bring a claim for used car fraud.

Step #4: Be aware that the dealer may call you after you’ve signed the contract and tell you that you have to pay more for the vehicle than stated on the contract. This is illegal and you have the right to demand your money back.

Step #5: Try to avoid financing the vehicle through the dealership. Remember that many dealers have relationships with finance companies and will force you to use them for financing. Do not agree. Shop around and get a better deal at your bank or credit union.

Step #6: Don’t sign a contract to pay for a car for five years when you know that the car will no longer be in use after three years.

Step #7: Don’t purchase a car based on monthly payment you can afford to pay. Negotiate the price of the vehicle first and only after that talk about the financing. Remember, you are making a bad deal when you finance the vehicle for a long period of time.

Step #8: Make sure the dealer puts all his statements in witting. Otherwise you will have a hard time proving that the salesperson misrepresented the vehicle.

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

If you have made the decision of buying a used car, consider doing the following before visiting the dealer:

Check the Buyer’s Guide on the Car You Are Considering.
The Buyer’s Guide is designed to protect car buyers against used car fraud and is a requirement of the Federal Trade Commission (FTC).

The guide should be clearly posted on the vehicle. If it isn’t, ask the dealer to provide it for your review.

Pursuant to the FTC, the Buyer’s Guide should include such useful information as:
• How the car is being sold (as-is or under warranty).
• How much you can expect the dealer to contribute to repair costs if the car is still under warranty.

The guide also includes a part with useful advice. Buyers should:
• Obtain written documentation of any promises or agreements.
• Retain a copy of the Buyer’s Guide for future reference.
• Have the used car inspected by a qualified mechanic before purchase.

After you’ve read the Buyer’s Guide the dealer may ask you to sign it. He will later use this as proof of the buyer’s receipt of the document. Be sure you read every word before you sign any paperwork. Finally, on the back side the Buyer’s Guide should include:
• The name and address of the dealership.
• The name and address of appropriate contacts if you think you are the victim of a car dealer scam.

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

www.DealerFraud.org]