Dealer Fraud

“Auto dealer fraud” is a term that describes deceptive and unlawful practices used by automobile dealers, at almost any stage of the vehicle purchase process — from advertising, to negotiation of vehicle pricing and financing terms. Examples of auto dealer fraud include “bait and switch” advertising practices, deceptive inflation of vehicle prices, and failure to disclose information about a vehicle.

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Buying used cars is more common today than ever before. That’s because the likelihood of getting a reliable car at a great price is very high. If you are interested in pre-owned car sales, here are some tips to get you started so as not to get into auto dealer fraud. 

Determine How Much You Can Spend
Remember, owning a car requires more than making a monthly payment. Buyers should also consider all other associated costs of ownership to make the most financially sound decision.

Research All Cars in Your Price Range
Don’t eliminate any used cars from the list until you’ve had a chance to learn about them. Research:
• Reliability
• Mileage
• Insurance Costs
• Consumer Satisfaction
• Maintenance and Repair Costs
• History of any recalls
• Handling
• Safety
The way a used car looks is important, but appearance shouldn’t be considered apart from the above list. Take all factors together to come up with a list of possible choices and research these more in depth.

Look for Used Car Dealers that Carry the Cars You Are Considering.
Learn about the history of each vehicle before you take a test drive. Unfortunately, test drives cause many buyers to throw caution to the wind. Just because the car shines in the sun and handles well on the drive doesn’t mean it is the best choice.
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When we think of used car sales associates, usually unscrupulous sellers come to mind. While used car dealer fraud can be a problem, not all used car dealers are bad. There are many reputable dealers that conduct their used car business with integrity. You have the best chance of avoiding used car fraud if you use the following tips.

Conduct Your Research Before You Buy
• Auto dealer fraud often happens because the buyer is uninformed.
• Learn about the car you are considering.
• How safe is it?
• What are the average costs for maintenance of the car?
• What is a fair price for the car?
You should also research your position. How does your credit report look? What is your credit score? Visits sites such as bankrate.com to get an idea of the interest rate you can expect to be charged for financing.

Plan to Avoid an Auto Dealer Fraud
• Auto scams are more common when buyers are hasty. Take your time when making a used auto purchase.
• Shop around
• Be willing to negotiate
• Don’t try and buy on the same day. Wait at least 24 hours before you decide and sign.

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

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Dealer profits on sales of new cars are small; dealers make their profits from financing, insurance, service contracts, added charges and options, repairs, and the sale of used cars. In other words, there is enormous financial incentive to make profits on these items to offset the dealer’s inability to make profits off the sale of the car itself.
A used car sale offer all the same potential for abuse as a new car sale, plus the added fact that the buyer does not really know what he or she is buying. The used car’s history is easily misrepresented or kept hidden, and consumers often do not know a used car’s real value.
The actual negotiation for the sale of an automobile is one of many ways dealerships and Web sites have of fleecing you, says an author of the book “Don’t Get Taken Every Time”. He says to think of your friendly salesperson as playing a game with your pocketbook. “Lurking around every dealership corner, waiting for you behind pop-ups on your computer screen, is some item or service that will grab a little more money. Most of these extra profit sources are not even presented to you at dealerships until the contract is presented to you for signing…sometimes you aren’t even aware that you purchased them. Understanding the anatomy of a car deal may help to prevent parting with more of your hard-earned money than necessary.
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Auto dealer fraud can occur at almost any stage of the vehicle purchase process, from advertising to signing on the dotted line. Here are some common situations that can give rise to auto dealer fraud:

• Improperly inflating a vehicle’s invoice price - The “invoice” is the amount that the auto dealer is charged for the vehicle, by the vehicle manufacturer. Examples of improper inflation of the invoice price include making additions to the invoice figure, when those charges were originally included in the invoice price (i.e. “destination” charges).

• ”Bait and Switch” - A form of false or deceptive advertising, in which a car dealer lures customers to the dealership by advertising one vehicle at a certain price, then tells the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle (or the advertised vehicle at a price higher than the advertised price).

• ”Add-On” Concealment - Concealing the inclusion of certain optional “add-ons” during the negotiation process, or the costs of those add-ons, but including those add-ons in the final vehicle price. (”add-ons” include warranties and prepaid service/maintenance programs).

• Vehicle Trade-Ins - Undervaluing and underpaying for a car buyer’s trade-in vehicle.

• ”New” Dealer Returns - Selling as “new” a vehicle that was actually returned to the dealer because of a defect or persistent mechanical problem, or was returned shortly after purchase for some other reason.

• Salvaged and Flood-Damaged Vehicles - In used car sales, failing to disclose that a vehicle has been designated “salvaged” after a car accident, or has been flood-damaged.

• Odometer Rollback - In used car sales, odometer “rollbacks” are intended to conceal a vehicle’s actual mileage.
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If you believe that you may be a victim of auto dealer fraud, there are a number of steps you can take to enforce your legal rights. Following is a discussion of three options: contacting the dealer, filing a complaint with a state agency, and getting an attorney’s help.

Contacting the Dealer. In many states, if you believe that auto dealer fraud was committed, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action (such as filing a lawsuit). This contact can be initiated by you personally, or it can be made by your attorney, but it should be in writing and should clearly illustrate both the problem (i.e. the dealer’s failure to disclose 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 a victim of auto dealer fraud, you may want to file a complaint with a state agency that protects consumers’ rights in connection with vehicle purchases. In some states, that agency may be a consumer protection division of the state attorney general’s office, or may be an agency specifically designated to handle complaints regarding auto dealers.

Getting an Attorney’s Help. If you recently purchased 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 all aspects of your case and explain all options available to you — 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. Remember that in some states, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action.
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[ To Learn more our services and areas of practice, please visit our website at

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