Dealer Fraud

Title washing scam results from the lack of a unified law regulating vehicle documentation in all the states. Title washing is used by car owners to “erase” the vehicle’s bad history in order to conceal from the buyer that it had a salvage title because of flood, severe accident or other damage. Title washing incidents increased after hurricane Katrina when many car dealers got stuck with excess of flood-damaged vehicles. Title washing is also frequently applied to “clipped” vehicles with the back and front coming from different cars, or rather of what was left of them after a crash.

The process of title washing is very simple. Here is how it is done. A car that is totaled by the insurance company is given a salvage title, which is often called “branding”. Then it can be repaired and resold with a low resale value. So, the car is transferred to states that don’t recognize the current title and assign it a new, clean tile. Title washing erases the branding and the car’s sale value rises again. Remember that title washed vehicles are sold not only by dealers but by individuals as well.

To avoid becoming a dealer scam victim perform VIN number check and get vehicle history report to reveal the truth about the car’s title. Once a car is assigned a salvage title this information is added to the computer database of services that provide vehicle history reports. These records remain in the database even when the car is transferred to other states.

VIN number check will protect you not just from title washing but from many other used car flaws, for example odometer rollback, salvage title or a flood damaged car.

The fake dealer scam is one of the numerous scams you may become victim of when purchasing a vehicle. Here is how this scam is designed. You are conducting an online search for a used car and come across a car for sale at a very good price, you contact the seller and they tell you the car is a fair distance away but they will pay for the cost to ship it to you, they ask you to pay via a wire service they use many times and you never see the money dealer or the cars for sale again.

The scam is clever here as the money wire website they have you use looks just like one you would expect to see, sometimes they look better than the real money wire websites they use the popular brand names on their site to make it look official and make a minor change to the web address which normally goes unnoticed. The money is wired and immediately picked up never to be seen again. The car photos and details are normally copied from local dealers’ websites and the car scam artist poses as one of the dealers.

To avoid this scam first of all you should be well informed and attentive. The first warning signal of this scam is the dealers’ offer to ship the car for free, not only they sell the car cheaper than its normal price but also they are willing to foot the bill for shipping. Never trust someone else’s recommendation and never use a money wire service for online payments as they are just not secure enough.

“Contract Packing” – Adding unwanted options and accessories.

Some dealerships “pack” a contract with add-ons like warranties, service contracts, options and accessories that you did not ask for. Common add-ons are “protection packages” and rust-proofing.

What you should do:

•    Before signing the contract, look at it carefully for any items you did not authorize.
•    If an item was included for “free”, check to see that it is in the contract and that you were not charged for it.
•    If you find any items that you simply don’t want, tell the salesman that you will not pay for it.

Financing Fraud – Lying about credit scores

Another common dealer scam used by fraudulent dealers is to trick you into believing that you have bad credit. They may tell you that your credit score is too low and you do not qualify for a low interest rate. They do this to convince you that the high-interest financing offered by them is a good deal.

What you should do:

•    Get a copy of your credit report with your credit score.

•    Shop around for financing. Credit unions and other financial institutions often offer rather low interest rates.

These are 2 of the most common dealer scams and tips for avoiding them. However, if you believe you are already a  dealer fraud victim, don’t waste your precious time and contact an experienced dealer fraud attorney.

In order to avoid becoming a dealer fraud victim, one should have certain knowledge about the most common dealer scams. In this blog we will discuss the situations when a car dealership cancels the purchase contract and the options and rights you have in those cases.

• If the dealership cancels the contract within 10 days, you get your down payment or trade-in back.
  

The purchase contract requires that the car dealer return to you everything given for the purchase. This includes your trade-in vehicle. If you gave a $2,000 down payment and a car as a trade-in, the car dealer must give you back both the $2,000 and the trade-in when you return the car you purchased.

Sometimes a car dealer may tell you that it has already sold your trade-in, and will offer you the value of the trade-in as listed on the purchase contract. The conditions of the purchase contract do not appear to give the car dealer this option. It requires the return of the trade-in. However, if the car dealer does sell your trade-in, at the very least, you should tell the car dealer that it has to give you whatever is the highest value for your trade-in out of either

(1) the value of the trade-in as listed on the purchase contract,

(2) the fair market value,

(3) what the car dealer received when it sold your trade-in.

• The car dealer cannot charge you for using the car you purchased from them.

For instance, it cannot charge you for the miles put on the car during the 10-day period. However, you are responsible for any kind of damage to the car during the time it is in your possession.

• The car dealer cannot cancel the contract after the 10-day period has expired.

If a car dealer tries to do this, you should clearly state the car dealer is no longer entitled to cancel the purchase contract, and ask the car dealer to send you a letter explaining why they think they can still cancel the purchase contract.

We have discussed CA dealer fraud cases more than once. The one we will disclose today is a really dastard type of trick that dishonest car dealers will use on people with the least ability to pay.  The rationale is that if someone can hardly afford the car, they almost certainly can’t afford an attorney to represent them and will just “live with it.”

Here’s how this dealer trick is set up.  You go to the car dealer and everything seems normal.  You find a car, negotiate the price and go into the “finance office.”  The finance manager then takes out a Retail Sales Installment Contract, which is a really long document.  It’s all filled in and reflects all the numbers that you discussed.  The finance manager spends a lot of time explaining everything to you and going over all the numbers, starting at the top of the document and pulling it toward him.  He’s meticulously going down the contract ensuring that all your questions are answered. As he’s getting toward the bottom of the document, the top is now hanging off the top of his desk – on the finance manager’s side.

And then comes the most decisive moment: all of a sudden he drops that big piece of paper down… So he backs up, and reaches down to pick up the contract, but doesn’t pick up the contract you thoroughly reviewed a moment ago. He picks up a totally different contract that is loaded with additional costs and items.  You might not catch it at first because the payment might even be the same – but the term of the contract has increased by a year.  If your payment is $400 a month for a 60-month contract and you were tricked into signing a 72-month or even 84-month contract, then you were just defrauded out of $4,800 – or $9,600 in the case of adding two more years! You have lost almost $10,000.

So how to protect yourself? During this transaction, there’s no way to protect yourself against this type of  trick. This dealer scam is really dastard as you might not realize this for years because there might not be a difference in payment!  The only real protection you have is to re-read your contract once you get home.  Make sure that it’s what you agreed to.  If it’s not then you should call a experienced dealer fraud attorney who specializes in this particular type of fraud.

If you have bad credit and want to buy a new car, you don’t have a lot of financing options. Therefore, you are likely to look for a car dealer who can provide the money required for the new car and encounter bad credit score scam.

Car dealer loans are not that bad, however they are more likely to have unfavorable terms.  Below are the two most common car scams that you should always keep in mind.

• The Bouncing Check Scam

Car dealers apply this scam to car buyers who managed to get the money for the purchase and will not ask the dealer for financing. The dealer will say that the check bounced and will offer you financing. Of course he will try to convince you that their deal is great and you can get the car immediately and so on. Do not be cheated by these sweet talks.

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

• Previously Wrecked Car Sold “As Is”

Some car dealers really don’t know that the car is a wreck, yet others know and skillfully try to cheat you. The real issue with buying a wrecked car is that you will be asked to sign papers that will state the car condition and that you agree to buy it “As Is”. In this case you have no warranty. If something happens to the car, the dealer will simply step back and there is practically nothing you can do.

The best thing to do to avoid this dealer scam is running a Carfax report that will show everything about the car. Also get a mechanic to inspect the car.

Rolling back car’s odometer to increase its resale value is one of the oldest tricks in the book but there are ways for consumers to detect this dealer scam.

Odometer rollback is harder today than it was thanks to computer technology and the availability of vehicle history reports. Some savvy individuals and unethical car dealers, however, are finding new ways to turn back the clock on the cars by rolling back their odometers and selling them for more than they’re worth.

To help consumers to detect signs of  their car’s odometer  tampering, we’ve put together a list of things to look for.

• First of all, use CarFax or AutoCheck to request a copy of the vehicle history report. This includes state registration and emission inspection data and much more.

• Examine the dashboard for scratch marks or loose screws. They could indicate that your odometer has been tampered with. However, it’s a sign of normal maintenance as well including light bulb replacement.

• If the odometer is of the older, analog variety rather than digital, then check to see if the mileage numbers are aligned. Give the 10,000 digit a careful examination.

• Pay attention whether during a test drive the car odometer sticks or not.

• Check for service stickers (tune up, oil change, etc.) that may have the vehicles true mileage. Check under the car’s hood and inside the door.

• Check the owner’s manual for maintenance records. If it appears that pages were removed, ask about it. This is a red flag.

• If you’re purchasing the car from a dealership, ask whether they have done a computer check. In case they have done, find out whether they have found any warranty records.

• Ask for a moment to look at the vehicle’s title. Look closely for signs the mileage has been altered.

• Note the title’s issue date. Was the vehicle sold soon it was issued? Be careful if it was. This is a common way curbstoners mask a vehicle’s actual mileage.

• Are there signs of wear? Check the carpet, arm rests, steering wheel, and pedals. A lot of wear could be a sign the car has more miles on it than the odometer indicates. If any of these parts look new, too new, it could be a sign the owner is trying to hide something, that is a sign of odometer fraud.

• Ask a trusted mechanic to do a vehicle inspection. The inspection includes looking for signs of odometer tampering.

Market adjustment fee is a scam that usually takes place with vehicles that go out of stock quickly. These are extra fees which car dealers add onto the price of certain types of popular vehicles. Since these vehicles are such a hot item, car dealers try to add this extra fee onto the vehicle purchase price. However, the truth is, no matter how popular a vehicle is, there is no reason for the consumer to have to pay above the MSRP.

Consumers can easily avoid this dealer scam if they never agree to pay more than the MSRP. By paying more than the MSRP, the vehicle purchaser is in reality saying that this type of dealer scam is okay and this should not be the case.

The total amount that an individual pays for a vehicle should be one of the common dealership scam. There have been a lot of cases when car dealer has quoted a set price for the total purchase, however when the prospective car purchasers have come to sign the paperwork, they noticed that there was a large discrepancy between what was quoted by the dealer and what is being charged in the end. What may be even worse some consumers do sign the paperwork without thoroughly reading it and become a victim of this dealer scam. Consumers need to be aware of this type of deals.

The best way to avoid this auto fraud is to ensure that what the dealer has quoted is the exact figure that will be on the paperwork. Read the paperwork carefully and let the car dealer know that you will not pay a penny more than the quoted price.

A lot of people know they are in a better position to negotiate if they have their auto financing prearranged before they venture down to their local dealership. That takes one arrow out of the dealer’s quiver. The car is just a vehicle to sell you a financial product. In many cases, an unscrupulous car salesman will tell you that you are still required to fill out a credit application because of the Patriot Act. That is, to put it bluntly, a total load of bunk.

Section 326 of the Patriot Act requires banks and other financial institutions must get all your personal information before you open a new account, but it says nothing regarding buying a new vehicle. Remember, you’re not opening a new account. It’s just one more thing the dealership may try to pull to keep you off balance during the negotiation.