Dealer Fraud

DealerFraud.org continues to inform you about the some measures you could take to avoid becoming a victim of auto scams. Generally, it is recommended to keep with you a camera, paper and pen. After a car accident has occurred, use your camera to take many photos and write down as much as possible information about every car and/or passenger. There are the facts you should note during an accident:

• License,
• Vehicle registration
• Car insurance details of drivers involved
• Head count of passengers in the car and their contact details.
• Note if they were all wearing seat belts
• Get the contact details of all those who witnessed the accident

All these facts will help you to expose the dishonesty of other parts involved in the accident.

The following list continues to describe the most popular methods that “scammer” use to defraud auto insurance providers and build false states:

• Sideswipe – this scam situation takes place when there are a lot of lanes at an intersection. The “offender or criminal” takes a left while another car comes into the lane they are at. The “perpetrator” rapidly speeds up to force a clash.
• T-bone - this scam situation takes place when there isn’t anyone around and the “scammer” stays at a highway until a car comes along and purposely crash into it as the car passes. Then false witnesses would report to the police that the passing car broke the law by running a red light or stop sign.
• Wave - this scam situation takes place when there is high traffic and a merge and/or “right of way” is talking place. The “scammer” sends a false sign to the victim and offers him right of way. When they start merge, the scammer speeds up to cause an accident When the police arrive, the “perpetrator” reject any claims that they offered the victim the right of way.
• Suspicious Helper - this scam situation takes place after an “honest accident”. What does it mean? A stranger approaches you after an accident and offers numbers to an auto repair shop, lawyer or doctor. Of course, it could be a frame-up: the auto repair shop often pads your repair charge, a doctor may give you shady treatment or none at all, a lawyer may even try to convince you to sue the insurance company.

Most of these frauds are done by professionals, but call the police immediately if you feel the accident is a scam.

Scam 4: The pay off loan or lease scam

The car dealer’s newspaper advertisement is constantly saying that they will pay off your entire remaining loan or lease. This is true literally, but there is no hint about the consequences of breaking the loan or lease contract. Actually the penalty for breaking the contract for your current car costs thousands of dollars. Of course, the car dealer pays you off the remaining loan or lease, but the penalty of thousands of dollars is subject to you. The ads are just trying to mislead you into buying their car so that they can profit more.

Never believe in these misleading ads, stay in your present loan contract and never break the contract.

Scam 5: The forced warranty scam

This car scam is easy to detect. Just after you have made an agreement with the car dealer and before you sign the contract, the sales manager will tell you that you cannot get the loan unless you buy the “required” warranty. They would say that the warranty is a necessity for the loan because the bank won’t allow it if you don’t have it.

Yet again, the easiest way to avoid this forced warranty scam is not to finance your car from car dealers.

Scam 6: The forget trade in scam

This is always found after several months of car purchase. The car dealer informs you that they would pay off your remaining loan for your old car that has been traded in, but they never do. You are in charge for your loan responsibility, not the dealer. The bank does not know the agreement between you and the dealer and they hold you responsible for the late payments.

The best way to pass up this scam is to pay off your existing liabilities on your old car before you buy a new car. This way you can get the title from the bank after you eliminate the debt, sell your old car and then buy a new car without falling for the scam.

In case a buyer has a bad credit but wants to buy a car, his financing options are not wide. For that reason buyers turn to car dealers who can provide the money required for the new car. Car dealer scams associated with car dealer loans are the following:

Previously Wrecked Car Sold “As Is”

You will be asked to sign documents that will state the car’s condition and that you agree to buy it “As Is”. In this case you have no warranty. If something happens to the car, there will be practically nothing that you can do.

The best thing to do to avoid this car scam is to order Carfax vehicle history report that will reveal everything about the car. Also get a mechanic to inspect the car that you are going to buy.

The Excusive Fee Scam

This car dealer fraud is amongst the top auto dealer scams. Though it is a simple one, a lot of car buyers easily get tricked. This car dealer scam is in fact not illegal. The car dealer simple adds a number under the car price total and asks you to pay it. The dealer convinces you that this fee covers their expenses for car checking, car cleaning or removing the plastic from the car seats. However, this extra charge is usually quite high for such services and you should refuse to pay it.

The Bouncing Check Scam

This auto scam is designed for those car buyers who managed to get financing for the purchase and thus do not ask the car dealer for financing. The dealer says that the check bounced and offers you financing. He will convince you that their deal is ideal and you can get the car immediately. Do not be cheated by such sweet talks.

The dealer will offer you loan at a higher annual interest rate. Moreover, some car dealers will even call you later to say that actually you do not qualify for the credit and will try to increase the rates even more.

The process of credit approval starts with the completion of the car loan application which is then taken to the finance manager for approval. Generally, some of the most reputable car dealers have national and local lenders and even internal financing capabilities and may get convenient car loan rates for their buyers.

However, in some cases buyers may fall victim to a very common car buying scam in which the fraudulent dealer may use the financial transactions to maximize on his/her profits.

This auto scam is usually designed like this. Your credit application is returned to you with the citation that your credit is not good and therefore you may not obtain the financing through your preferred source.

However the salesman tells you that he/she is going to consult your finance manager. After this, you are told that the dealer has managed to push the finance manager via another bank for you to be approved. This makes you pay a higher interest on a car loan than it should be. Thus, by misrepresenting your credit score the car dealer may make you pay more than you intended to. You increase the interest rates on your car loan, which enables the car dealer to make more money on you. On the other hand a reputable dealer who has good lending relationships will get a better car loan rate than the buyer can get without any assistance.

So before the car buying process, you need a copy of the credit report. When you have this information, no car dealer tricks may work on you. When seeking for a car loan, it is better to ensure the lender institution is genuine. This also implies to online customers because there are car scam sites that take make money based on an individual’s financial situation.

In case you are in a similar situation that is described above and need help and assistance, don’t delay turn to an experienced car lawyer.

You purchase a new vehicle from a car dealer and arrange a finance package with a low APR. You drive away with your vehicle and a few weeks later you receive a call from the dealership that explains that they have received word from the finance company and they have declined the low APR you requested which was subject to finance or loan approval in your contract. The truth is that when you supply your financial information to the dealer he/she is able to determine exactly what APR you are eligible for depending on your income, so if you don’t misrepresent your income they should know immediately what your credit score is and what you are able to receive.

To avoid this auto scam find out what your credit score is and what APR you are eligible for to know if you are being told the truth from the start. Leave a deposit and don’t accept delivery of the car until the loan has been approved in written form; this should only take a few days. Don’t take the car that day even if they say it’s ok.

The other option is much safer - don’t finance your car at a dealership especially if you have bad credit. With a well known financial company you will be able to avoid payment scams as well.

If you have already been scammed, there are still a few things that you can do. First of all see if you can get finance from an alternate source, such as an online finance company. You may also try to talk to the dealer and get out of the deal. If all else fails try turning to an experienced dealer fraud attorney for valuable advice and help.

Generally, most car buyers are well aware of common dealer tricks and dealership scams. However, there are car buyers who are less experienced can easily fall for commonly used dealer tactics.

Remember that when selling a new or used car, the car dealer makes profit in two ways. First they profit from the sale of the vehicle itself, and second, from the interest paid by the buyer. One thing that you should keep in mind when you intend to buy a vehicle is that the dealer will, most probably, try to trick you into paying as much for the car as possible.

Dealership Mark-Ups is one of the tricks most commonly used by the dealers. Usually, car dealerships are in a tight relationship with certain finance companies and try to encourage their customers to use that specific finance company. Car buyers can avoid this auto scam if they secure their own financing with a bank or credit union rather than through a dealership. Dealerships make profit from the interest paid as the finance company of the dealer may increase the loan rate by a few points and the dealership receives the difference you have paid.

The car buyer can easily avoid the dealership mark-ups fraud by comparing auto loan lenders. Do not accept the first loan packaged offered, and never accept dealership financing. First shop around and find the deal that is the best for you.

Each year thousands of people unwittingly buy cars that have been severely damaged in accidents. It’s not too difficult for dishonest rebuilders to patch such vehicles up quickly and turn a profit by selling them to unsuspecting buyers.

To avoid becoming a victim of such auto scams, keep reading our blog.

1. Understand what happens to “totaled” vehicles. If a car or truck is damaged so badly that the cost of repairs exceeds its value, insurance companies typically declare the vehicle to be a total loss and pay out a claim to the owner. Then many insurers sell these totaled vehicles at salvage auctions. Sometimes the cars get purchased for their parts or scrap materials; in other instances, they get snatched up by rebuilders or by car dealers who hire rebuilders.

2. Check the vehicle’s title. Does it reveal the car or truck’s storied past with the words “salvage title” or another similar expression, such as “parts only,” “unrebuildable” or “scrap”? If so, that’s a sign of a past accident. If not, don’t assume that the car is completely OK. Those words appear on the titles that insurance companies hand over at salvage auctions, but it’s not hard for those in the barely regulated rebuilding industry to have that disclosure removed. One way to do this is to bring the car to a different state and re-register it.

3. Ask the seller point blank. The simplest way to find out whether the car has been in an accident is to ask. Unfortunately, though, the seller may not be up front with you. Nevertheless, make it a habit to ask this question clearly and directly.

4. Go to a mechanic. Whenever you buy a used car, it’s important to have the vehicle carefully inspected by a mechanic — ideally a mechanic with a background in collision repair. Even if you are worried about the cost, get the inspection anyway. It’s worth it!

It has been shown that one out of three used cars has something to hide. That could be outstanding credit, odometer rollback, etc.. That is why car dealer fraud cases are amongst the most common issues.

Vehicle cloning is a used car fraud that has become rather widespread today. To avoid being a victim of such a  auto scam, follow our tips given below.

1. Registration papers: The registration papers give you some initial information about the vehicle. Make sure the license plate on the car matches the number on the registration papers. Make sure the owner’s name matches the seller’s – and ask for a picture ID.

2. Maintenance records: Other papers that you should inspect very carefully are the maintenance records, which are not only a good way to see if the car was stolen (thieves never have the maintenance records), but also give you a hint of how well the car has been taken care of.

3. Vehicle identification number: Check the VIN which should match the number on the title and registration. The VIN is located on the driver’s side above the dashboard, inside the driver door and under the hood. Look for any signs that may indicate tempering with these numbers. If the windshield contains any slight damages, there is a strong possibility that the VIN has been replaced. If so, the car is probably stolen.

4. Insurance: Ask to see the insurance papers and check that everything matches. If the vehicle is uninsured, it might be stolen or have other problems. If the dealer cannot provide insurance papers, this is probably not a car to buy. If they do provide the papers, call the insurance agent for verification.

Used car fraud becomes more and more prevalent. Vehicle cloning is one of those wide-spread scams. Here is how it works. Thieves steal a car, usually a high-end “desirable” car or SUV. Then they take the vehicle identification number or VIN from a similar car and slap it on the stolen car. Because each VIN is unique like a fingerprint, the stolen vehicle becomes a clone of a legitimate vehicle. Add some fake papers, and the thieves are ready to sell you a vehicle that looks perfectly legal.

When the police come knocking on your door, you have no legal recourse – you have to hand over the stolen property. Statistics show that such stories are happening to more and more people ever year.
But you can avoid being a victim of such an auto scam. Here are some tips to protect you from ending up the proud owner of a stolen car.

1. Low sale price: If the car seller is asking a extremely low price for the vehicle, inquire why. Smart buyers typically research car prices online before purchasing. To check current car values simply search for a similar vehicle on a popular car classified website. If the price asked for the vehicle is significantly lower, be suspicious as the car could be stolen. The thief may be asking the lowest possible price to rid them of the vehicle quickly.

2. Phone number: Always ask for the car seller’s landline before your first meeting. While cell phones are rather convenient and increasingly common, it will be rather difficult to trace if the need arises. If the seller refuses or states that they only have a cell phone approach with caution. Be extra watchful in your dealings with this person since it will be very difficult to find them if they suddenly disappear.

3. Registration address: Ask to view the car in the daytime at the address listed in the registration papers. If the seller refuses and instead asks to meet in a public place, make sure there is a valid reason. Even if the seller gives a good reason there is still a higher probability that the vehicle is stolen. If you still feel the seller is legitimate and the car is not stolen be aware that he/she could be hiding something serious about the car.

4. Inspection: Why view the car in the daytime? So that you can inspect the whole car very carefully. Look for any signs that people tampered with locks. Replacement locks are a giveaway. Check hidden places in the vehicle to see if the paint color has been changed, which might also disguise a stolen car.

Take these steps and protect yourself from used car fraud.

You did everything you were supposed to do. You put your best deal on the table and they accepted it. Now you move to the Finance Office. You think all you need to do is to sign the paperwork and drive home. Not so fast. The Finance office is the biggest profit center in the car dealership. That nice person behind the computer is a fraudulent salesperson. Reviewing the deal and seeing where he can squeeze more profit out of you is his job.

Do not be in a hurry to sign and get out or you will be very sorry. A good finance salesperson will cheat you for $3,000 - $4,000 more dollars and hide it in your contract if you are not watchful enough. First of all, learn to say “no” to anything they try to upsell you on. You must read the contract very carefully and make sure the numbers are exactly what you agreed upon. There are many little scams that occur in the finance office. One of them is the Subject to financing car scam.

Once you sign, you are stuck. Too many people sign the contracts without reading them thoroughly to get home as soon as possible. They get home, looking through the paperwork and find items they didn’t want or loan rates that are higher, or that the length of the loan has been extended etc.. Once you sign the contracts, you are stuck. You already signed a form that stated that you read and understood all the items in the contract. No court is going to hear your case. Take your time and read everything. If you are not good at reading contracts bring someone with you who is competent enough in that field.

The Subject to Financing clause scam. This is a very common tactic finance salespeople use. If you see this on the contract do not sign and above all, do not drive the car home. Another common term is Subject To Loan Approval. Several days after you drive home with your car, you receive a phone call from the salesperson that your loan fell through and you need to come back in and resign through another lender for more money. They may say we have great news, we got you a lower payment, and all they have done is increased the length of your loan. They do this more often with bad credit or subprime buyers who are usually more cooperative. This occurs mainly on weekends when the lenders are closed. Just tell the finance salesperson that you will come back on Monday after we have a confirmed approval.

If they don’t have your loan approved, stand up and tell him that you will come back and sign when you have an approved loan with a payment book. Never sign a contract without knowing your lender, length of loan, interest rate and monthly payment. Once you sign and drive home with your new car you are at their mercy and you will end up paying more.