Dealer Fraud

There is nothing worse than falling for a car sales scam and letting the dealer to rob your hard earned money.  You can avoid car sales scams if you enter the car dealership prepared. In this blog we will share 5 quick tips with you that you must know to avoid getting taken by a fraudulent car salesman.

• Know your limit. Before entering the dealership know exactly how much you can afford to pay.  The car salesman’s job is to sell you a car and make a profit and they will always try to persuade you to spend more.  If you know your spending limit you will not leave the dealership with buyers regret for laying out more money than you presupposed to.

• Calculate the total cost. Many dealerships will plaster a sign on the vehicle windshield advertising a low monthly payment for it.  This can make you feel like you are getting a good deal but when you add up the total cost you find out you are actually overpaying.  Always calculate the total cost before signing.

• Decline extras. This is a classic bait and switch.  The salesman will give you a great price break on the car up-front only to load up his profits by adding a lot of unnecessary extras such as extended warranties, special paint sealants gap and insurance plans.  If you feel you don’t need any of these extras, simply refuse to pay for them.

• “This deal is only good for today.” This is a common car dealer trick which is used to get you to buy the vehicle immediately.  The dealers’ fear is that if you go home and sleep on your decision you will not come back.

• You can negotiate any price. It is good for you to know that any price may be negotiated at a car dealership.  Don’t get fooled into thinking that the sale terms are final.  Plan your car purchase on weekdays when the agents are not so busy to have a better chance of negotiating the price.

1.    Step 1

Understand that aim of any bait and switch artist is to get the person inside the store. If you go to purchase a particular car at a certain price, and the car is gone, you may have been lured by bait. Don’t bite. Insist on a rain check for the car. If you can’t get one, leave the store.

2.    Step 2

Play the skeptic. If a price sounds too good to be true, assume that it’s nothing more than bait. For example, a car dealership ad may feature a car at a great price, but you find out it has no special features. Also the advertised monthly payments may be for the longest possible terms or only with the best credit score possible.

3.    Step 3

Beware of vague pricing. If the salesperson will not talk on the car price and just wants to talk about monthly payments, a bait and switch is in progress.

4.    Step 4

Demand to see the originally quoted car. If the salesperson will not produce it, then perhaps it never existed and they are using the bait and switch to sell higher-end merchandise.

5.    Step 5

Research any car before shopping. If you can’t find it at a price remotely as low as the offering, you may be looking at bait.

6.    Step 6

Read the fine print of any advertisement or contract. In the bait and switch, fine print may alter the agreement you thought you were signing. Read each section of an advertisement or contract before signing or buying anything.

We hope these 6 steps will help you avoid becoming a bait and switch victim.

Misleading advertising consists of any claims that are untruthful or deceptive and may give a consumer the wrong impression about a product they wish to purchase or use. It has the following types:

•    Bait and switch advertising. It is illegal to promote a product that a company does not intend to sell or provide. Companies using bait and switch tactics will pull in consumers by promising to sell an item at a certain cost, when in fact they plan to sell something that is more costly.

•    High-pressure sales tactics

•    The use of deceptive form contracts

•    Artificial inflation of prices

•    Use of fine print to mislead consumers

•    Failure to disclose when an offer expires

•    False claims of offering wholesale or factory direct products misleadingly

•    Deceptive non-disclosure, etc..

There several penalties that may be brought against companies who run false or misleading ads under federal and state consumer protection laws. The penalties may include ordering companies to stop engaging in deceptive practices, hefty fines, corrective advertising, disclosures, and more.

In case misleading or false advertising causes harm or injury to a consumer, civil penalties can be imposed to recover monetary damages. Under the Lanham Act, a consumer who brings a lawsuit against a company must prove that the advertisement was actually false or likely to mislead or confuse consumers. Evidence of consumer confusion is a requirement for obtaining recovery for damages.

If you or someone you know has been defrauded by misleading or false advertising, seek the help of an experienced dealer fraud attorney who can protect your legal rights and maximize your options.

There is nothing worse for a consumer than falling for an auto sales scam. The purchase of the vehicle is one of the most important purchases and if you fall for the scams of a car dealer you can loose a lot of money. However with a little bit of information you can avoid auto sales scams. Following are 5 important tips you can use to avoid auto dealer fraud.

1. Always go into a dealership with a strong understanding of how much you can afford for monthly payments. Remember, that a car dealer wants to sell you a car and make a profit and will often try to get you to spend more.

2. Watch out for predetermined monthly payments. It’s a common tactic for dealerships to plaster a sign on the vehicle windshield advertising a low monthly payment for the car. This makes a customers believe like they are getting a good deal. However, when you add up the total cost you find you are actually overpaying. This is why you should always have the total cost calculated before signing any document.

3. One of the oldest scams is a classic bait and switch. The car dealer will give you a great price break on the car up-front only to load up his profits by adding a lot of unnecessary extras such as extended warranties, gap insurance plans and special paint sealants. Avoid it by declining any extras.

4. “This deal is only good for today.” This is a common dealer trick and is designed to get you to buy today. The truth is car dealer is afraid that if you leave the dealership and think the deal over you will never come back again. Dealership will still be willing to sell you the car and make you a deal tomorrow.

5. You can negotiate any price. Never get to thinking that the terms of the sale are final. It is good for you to know that any price is negotiable at a car dealership.

One of the areas car dealer fraud occurs most often is that car lease fraud. Even with the economy going down car dealers manage to arrange for financing for car leases. Some customers think that car lease is less expensive, however at the end they found out it to be much more expensive.

The commonly used lease fraud is the “bait and switch.” This happens when the dealer makes a consumer believe that he is buying the car when in fact he is switched into a lease. Often dealers will trick consumers by telling that they need to sign for a lease “for a short time” to let interest rates come down. They usually promise to change the deal to a purchase in a few weeks. However, when the consumer comes back to the dealership the salesperson who negotiated the lease with him is nowhere to be found and no one at the dealer is interested in changing the consumer into the promised purchase transaction.

Car dealers have a number of reasons why they prefer to put you into a lease and not to a purchase. The main reason is that car dealers often get bonuses from leasing companies and manufacturers to put consumers into leases instead of purchases. Another thing is car dealers know that lease contracts are confusing for customers and allows dealers to add a lot of higher hidden fees and payments.

One area of car dealer fraud that is quite common today involves fraud in car leases. On the surface car leases appear as less expensive for the consumers, but the truth is they are almost always more expensive. And though the credit crunch, dealers are still able to arrange for financing for car leases.

The most common lease fraud is the old “bait and switch.” This happens when a consumer goes to a dealer to buy a car and believes he is buying a car, but is instead switched into a lease. Sometimes consumers are told that they need to sign up for a lease “for a short time” to let interest rates come down.” However when the consumer returns “in a few weeks” to change the deal to a purchase the salesperson who negotiated the lease with him is nowhere to be found and no one at the dealer has any interest in changing the consumer into the promised purchase transaction.

Car dealers have various reasons why they want to put you into a lease rather than to a purchase. One of the reasons is that car dealers often get larger incentive bonuses from the leasing companies to put consumers into a lease, so dealers frequently make more money from the lenders on leases. Same with the manufacturers: depending on what is going on with vehicle inventory, manufacturers will often give dealers incentives to put consumers into leases instead of purchases. Finally, lease contracts are confusing, permitting dealers to throw more curveballs into the lease which result in higher hidden fees and payments by the consumer.

You go to the dealership and seems like you have already decided what model you are going to buy. And this is when this car fraud usually happens. The car dealer starts ticking off all the reasons why that car simply isn’t good enough for you and switches you to another model. Before you even know it, you’ve signed on for a car that’s bigger and better and, of course, more expensive.

And not thanks to all the opportunities the Internet gives, this old dealer trick has a new twist. 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 is the type of scam 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. This item is probably 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.

It would be a good idea as well as wiser to lease a vehicle from a car dealer and/or automaker rather than from a private leasing company. In some cases 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.

Car dealers know up to 30 or more ways to potentially trick and deceive car buyers! Of course, there are some federal regulators that try to curb widespread deception. However, 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. They may as well confuse car buyers about leasing terms of the sales contract.

Despite the regulation attempts, dealers are still able to encode lease terms in confusing language and withhold key financing terms. Which may be even worse, dealers are not even required to provide certain pertinent information until the customer is 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. The trick is only a few of these cars are 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. Always tell the salesperson you will not be ready to buy until you can compare the terms with the dealer’s competitors.

One of the most common types of auto fraud is the practice of listing a higher price on the contract than the number negotiated. This practice is most often used at non-English speaking customers and is better known as bait-and-switch tactic. The dealer trick can be applied to the vehicle’s price, the price of accessories, service contracts, and any other cost item.
Confusing customers about the “out the door price” may be another variation on this practice. This happens when the dealer makes customers believe that the total cost to drive the car off the lot is X, however in fact the total cost of the vehicle is much more. For example, the price quoted may not include accessories, taxes and other payments.

You can avoid this car fraud if you carefully read the contract before signing. Pay attention to the following:

(1) Cash Price Vehicle - this includes only the price of the car excluded all the other costs,
(2) Cash Price Accessories- includes any add-ons,
(3) Total Cash Price - includes the price, the add-ons, taxes and service contracts,
(4) Subtotal - includes everything under Total Cash Price plus any government fees; and
(5) Amount Financed - the amount of credit that you are taking out.