Dealer Fraud

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.

The series of bumps in the price and the attempts of grinding you to spend more money is known as the Bump and Grind scam. Here is how this car dealer scam happens and how you can avoid it.

The Bump and Grind scam happens during the car buying negotiation process. It’s a common sales technique used to gradually raise the price of the vehicle. If the salesperson tried to raise the price by $2000.00 right off the bat then you would freak and run out the door.

So the technique of gradually raising the price by just a little here and a little there is much more subtle and quite effective.

When you make an offer on a car, the sales person will certainly tell you some bogus line like: “Hmmm, my boss will kick me out of his office if I take this offer to him, so let’s bump it by $200.00 and then he will at least listen to me?”

So that’s the first “bump” and on it will go. The sooner you succumb to the “Bump”, the more bumps in the price you can expect. Then the dealer will supposedly present your offer to the sales manager and supposedly argue on your behalf.

Just remember that such scenes are just simple auto scams designed for making you believe that you’ll make a great deal in case the sales manager agrees to the price offered by the sales person. Finally after about quarter of an hour the salesperson will come back and say something lame like: “That sales manager is such a hard head! If you could just agree to add another $250.00 to your offer then I’m almost sure he will agree to your price”.

You can avoid the bump and grind scam by telling the salesperson that you’re aware of it and are not amused by their games and that they are just wasting their time and yours and if they continue with the bump and grind car dealer scam that you will just leave.

Title fraud is on the rise because of the current recession and is often the result of poor business management on the dealer’s part. It mostly happens when dealers on the verge of bankruptcy, without enough money to keep operations going, can’t pay off the liens on titles for the vehicles they’ve purchased and sold. Surprisingly, a lot of car dealers don’t technically own the vehicles they sell. They borrow money from financiers, called “flooring agents,” to pay for them. Once a dealer sells a car paid for by a flooring agent, he or she is supposed to pay off the agent to get the title — or clear the lien on the title — and pass it on to the buyer. The problem arises when the car dealer doesn’t pay off the loan. In such cases, car buyers will come back to pick up their license plates and title, only to find that they aren’t available and the dealer is nowhere to be found.

The same applies to trade-ins. The dealer is supposed to pay off the lien on a trade-in, but either is unable to pay or pockets the money and shutters the business after pulling this stunt a number of times. As a result, the trade-in’s original owner is left with a car payment on a vehicle he or she no longer owns, and the new owner, who bought the trade-in with a title that has a lien on it, now technically owns nothing.

Warning Signs

As a warning sign of this auto scam may serve a dealer who says he/she doesn’t have a title but can get it.

How to Protect Yourself?

Always ask to see the title and examine it carefully. If the dealership owns the car or is honest, it will have the title on hand or be willing to produce it. If it doesn’t or won’t, then something’s not right. Remember also never to trade in a financed car with a balance left on the loan. If you can’t pay it off for any reason, insist that the dealer put in writing that he will pay off the trade-in within 10 days. If the dealer is trustworthy, he/she shouldn’t have a problem with this request.

If you are already a vitim of dealer fraud, don’t delay to turn to a qualified dealer fraud attorney.

Buying a car means that you will own the vehicle when you finish making payments on it.

Leasing means that there is a period of time – the lease period – when you’ll be making monthly payments on the car and at the end of the lease period you will not own the car (unless you make a large payment to own it). Plus, if you want to return the car before the lease period is over, you’ll have to pay a big penalty (an “early-termination fee”) to do that.

Customers routinely fall into auto scam when car dealers lead you to believe that you are purchasing when you are really leasing (and vice versa). Among other misrepresentations is telling customers that you will own the car at the end of the lease. This is far from reality because almost all leases require you to make a large payment at the end of the lease in order for you to own the car.

What you should do?

• Read carefully and make sure you understand the entire written contract. If you want to buy a car, make sure the contract you are signing doesn’t include the word “lease” in it. It seems easy and obvious yet many customers are easily tricked at the dealership. Bring a friend if you are not sure.

• Don’t allow dealers to pressure you into a lease if you want to buy.

• Shop around and make sure you fully understand what your obligations are to avoid becoming a dealer fraud victim.

Peter Moutafis the owner of Riverhead Suzuki, also known as Moutafis Motors and Prestigious Motors, has been charged with filing fake warranty claims for vehicle repairs. According to the police these repairs were never performed.

Police claims that Moutafis, 35, the car dealership owner created bogus records of mechanical failures on the used vehicles with extended warranties bought at his dealership. Later without the owners’ knowledge the dealership owner fraudulently billed warranty companies for repair work done by the dealership.

Police reported that yesterday Moutafis, of 181 Cranford Blvd., surrendered to Seventh Precinct detectives and was charged with insurance fraud, grand larceny, falsifying business records, and possession of a forged instrument, police said.

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