Dealer Fraud

You walk onto the car lot, your heart set on a certain model, but immediately the dealer starts ticking off all the reasons why that car simply isn’t good enough for you. Before you know it, you’ve signed on for a car that’s bigger and better and, of course, more expensive.

This old dealer trick has a new twist, thanks to the Internet. These days car shoppers are showing up armed with all sorts of information they’ve gotten online, from the invoice price of the car right down to the cost of heated seats. The dealer’s best defense is steering you into unfamiliar territory.

The bait and switch scam is something that’s been used in just about every industry. This scam involves providing a vehicle for advertisement or promotion which is probably a very base model, not very desirable for some reason, but attaching it to a very low price to get you in the door. Once you are in the car dealership, the salesman will point out the frailties or the letdown of that vehicle while shifting to another vehicle that has a higher profit margin and is probably more desirable. The bait and switch scam is one of the oldest games in the book. It could be okay if you find out that the vehicle’s not going to meet your needs, but don’t go in expecting that every vehicle’s going to be priced as aggressively.

If possible it may be wise to lease a vehicle from a car dealer and/or automaker instead of a private leasing company because when it is time to turn your vehicle in, the dealer may give you more of a “break” on how much of the “wear and tear” deposit you get back, especially if you buy or lease another vehicle from the same dealer.

There are up to 30 or more ways for car dealers to potentially deceive car buyers! U.S. federal regulators try to curb widespread deception but salespeople for dealers may withhold information, make false or misleading claims about leasing obligations and even possibly engage in illegal “bait and switch” sales tactics concerning the exact models of cars being offered on an advertised deal, as well as confuse you about leasing terms of the sales contract.

Despite attempts at regulation, dealers may still be free to encode lease terms in confusing language and withhold key financing terms. Worst of all, dealers may not even be required to provide certain pertinent information until you are ready to sign a contract! Beware of “subvented” leases which are equivalent to the industry’s “blue plate specials”. Automakers, dealers and some leasing companies may offer low price leases on certain vehicles, yet only a few of the cars may be fully loaded with options at the advertised cut- rate or discounted terms! Remember, possibly 8 out of 10 salespeople may not even disclose terms of the lease beyond the monthly payment. Regardless, always tell the salesperson you will not be ready to buy until you can compare the terms with the dealer’s competitors.

Auto fraud can occur at 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 fraud.

Improperly inflating a vehicle’s invoice price: 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 or selling 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.

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

New Dealer Returns: Selling as a new 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.

One of the favorite tricks of salesmen and dealerships is the old "bait-and-switch" which is still as effective as ever. Typically a salesperson will tell you all the things wrong with a model that you had carefully researched and were intent on buying or leasing. Do not be dissuaded by such attempts to "educate" you. The only purpose for a salesman to provide such disparaging information is to induce you to trade up to something which is more expensive and which provides more profit to the dealer.

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

“Bait and switch” sales tactics are a form of false or deceptive advertising, in which a car dealer lures potential buyers 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).

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

www.DealerFraud.org]

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

www.DealerFraud.org]