Dealer Fraud

Below is a list of auto dealer activities which may signal possible auto fraud in your automobile purchase or lease transaction of a vehicle in California.

• Switching the consumer from a sale to a lease without full disclosure
• The sale of a vehicle which was previously repurchased from a prior owner as a lemon without full disclosure to the consumer
• The sale of a vehicle that was previously salvaged as a total wreck without full disclosure to the consumer
• The sale of the trade-in vehicle and then later undoing the transaction
• Failing to provide the consumer with a written contract in the language in which the consumer negotiated the transaction (in Spanish, Vietnamese or Tagalog as well as certain other languages)
• Improper calculation of the negative equity on the trade-in vehicle
• Failing to disclose to the consumer the vehicle history including records of all substantial accidents causing considerable damage
• The sale of a vehicle that was previously used as a rental vehicle without full disclosure to the consumer
• Charging more than the advertised price for the vehicle

The dealer may commit many other improper acts that may not constitute fraud by themselves. At all events, if one or more of these types of behaviors occur the dealer may indicate that there is something improper about the transaction. That’s why the consumer should be very wary about signing any documents without further review and understanding of the transaction.

You must be very careful if you consider buying a used car. According some research about 10 to 12% of the used cars sold have some kind of hidden damage. Moreover, it is estimated that approximately one million cars which have been totaled and rebuilt are sold each year as cars that had not sustained any damage. So if you are thinking about purchasing a used vehicle you should first have it inspected by a qualified mechanic. Make sure the mechanic is not related to the dealership from which you are buying the vehicle. Car dealers will disclose to you any damage history of the car telling that they simply don’t have any information about the prior history of the vehicle. Be aware that the titling laws vary from state to state and there are numerous titling scams. The result of these laws even totaled cars that are entitled to be salvaged vehicles can be re-titled in another state. Sometimes these vehicles are sold in auctions and end up in a state far away and the dealer who sells the car may not have information about the vehicle history.

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

Kelly Blue Book has for a long time benn considered as the main source for defining the value of used vehicles. However, you should be aware that the book is published in two separate guides. One of the guides is published for the consumers and it lists retail prices of the vehicles. The other is published for the dealers and it lists the wholesale prices of the vehicles. This is the reason the price offered by the dealer may not always be accurate. It’s better if you choose to determine the value of your car based on advertisements in local newspapers. Look for cars similar to yours that are being sold, but remember that you will not be selling your car to the dealer at retail on your trade-in. Alse keep in mind that the Kelly Blue Book is actually designed for people who are in the business and that’s why mostly provides the edge for the dealer rather than for the consumer.

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

On the greatest sources of income to dealerships is the markup on financing packages or loans that they provide to their customers. Basically, dealers first buy credit at a wholesale price and then sell it to their customers at the retail price. They add 1% or 2% markup on the moneys financed. The law does not require the dealer to disclose this information to the consumer. They simply charge consumers for a service that has been provided making significant profits.

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

On the transaction, one of the biggest profit source for the dealer is considered to be the trade-in price being offered to you. Before trading in a vehicle consumers try to get information from the Kelly Blue Book and web sites to help them determine the price of the used vehicle. However, it is very difficult to to determine the value of the trade in vehicle and most consumer are willing to accept a lower trade-in than what the vehicle is actually worth. This is when the dealers use their tricks to scam the consumers. The dealer knows that when the consumer is tempted to buy that new car his/her resistance has pretty well been lowered and he/she is more likely to accept a bad deal in the trade. Most car dealers will make you believe that they are actually providing a service to you by buying your old car. The best way to avoid a scam with your trade-in is to negotiate your trade in value and later talk with the dealer about purchase of a new car.

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

Be aware of the dealer who claims that they have to charge a certain price because their lenders or the leasing company will not allow them to sell below a stated price. The truth is, lenders and leasing companies have have nothing to do with the car’s selling price. This is just another good excuse for the dealer to make profit. Also some dealers may state that you purchase the extended warranty or service contract. Remember that this is not mandatory and is not required by the lender or leasing company. This is simply another way for the dealer to earn more money by selling you extra items.

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

Actually, “holdback” is profitable for the dealer whereby the dealer pays from 1% to 3% less than the invoice price which may be shown to you by the sales manager. First the dealer buys the vehicle from the manufacturer at the stated price on the invoice. Later, when the dealer sells the car the manufacturer provides a rebate to the dealer for the costs of maintaining that vehicle in its inventory for a period of 90 days. Taking into consideration that most vehicles are sold more rapidly, i.e., within 90 days, some part of that rebate or reimbursement from the manufacture is the net profit for the dealer even if the car is sold at only the invoice price. The dealer will probably not provide you a further discount below the invoice price, but be aware and negotiate.

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

Car dealers make good profit from leasing, which is also an area of automobile fraud. Most often car leasing fraud may involve false terms of the lease, such as the amount exchanged for trade-in, down payments, or rebates. Car leasing fraud include higher capitalized costs than represented; manipulation of residual values; exorbitant early termination penalties; and even deception about whether the transaction is or is not a lease. If you feel confused about the terms of your car lease contact us.

__________________________________________________

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

www.DealerFraud.org]

An unbelievable percentage of car sales involve fraud. There are number of reasons why automobile fraud is so widespread. First of all car dealers make the car purchase process as complex as possible. Most of the time the sale process involves compliance with state titling and registration laws, often involves trade-ins, financing, leasing, physical damage and liability insurance, credit insurance, service contracts, options, and other fees. This is almost always a reason for confusion and deception for car buyers and an opportunity for car dealers to commit fraud.

__________________________________________________

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

www.DealerFraud.org]

State and federal consumer protection laws prohibit automobile fraud claims such as odometer tampering, auto dealer financing scams and vehicle history misrepresentations. If you think your car dealer committed fraud or any fraudulent practices against you, immediately contact an experienced car dealer fraud attorney, who will help to preserve your legal rights.

Odometer rollback or tampering or is one of the most common dealer practices. To avoid this car fraud check for maintenance and oil change/lube stickers, as well as any receipts that could contain mileage information greater than odometer mileage. Your car dealer is required to provide you with a written statement, where the actual mileage on the odometer should be disclosed. If at time of purchase the car dealer did not provide you with this, contact an attorney.

__________________________________________________

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

www.DealerFraud.org]