Dealer Fraud

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

What you should do:
· Before you sign, look at your contract carefully for any items you did not authorize .
· If you were told something was included for “free”, check to see that the item is in the contract and that you were not charged for it.
· If you find any items that you don’t want, tell the salesman that you will not pay for it. Put a line through the item in the contract and reduce the Total Sale Price by that amount.

Dealerships are required to disclose material known facts about a used vehicle such as if the vehicle was:

• involved in a prior accident (that caused substantial damage)
• it was a prior rental vehicle
• a lemon law buy back (the vehicle was repurchased by either manufacturer or dealer under the lemon law because of a defect)
• odometer readings not accurate, etc.

They are also prohibited from misrepresenting facts about the vehicle’s history (such as its never been in an accident, it was a trade vehicle (when it was a rental), etc.

Many car dealership customers are unable to pay the entire down payment at the time the purchase contract is signed. Often dealerships will allow the customer to make a down payment in payments (called deferred down payments). Although the vehicle code recognizes these deferred down payments, they must be itemized in the purchase contract, including the amounts and due dates for the deferred payments. Some dealerships, however, will have customers write checks for the deferred down payments and then agree not to deposit the checks until an agreed upon date. The customer is then made to sign a separate agreement that lays out the dates on which the checks will be cashed and additional provisions regarding any returned checks – thus creating additional obligations that are not included in the purchase agreement.

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

Dealerships sometimes forge the signature of customers on subsequent contracts that change the terms of the original signed contract (especially if the customer refuses to sign the new contract). Other commonly forged documents include: credit applications (with fraudulent representations about income, etc.), as well as buyer’s guides and disclosure forms (to prevent buyers from reading their buyers’ rights and/or information that may cause them to reconsider their purchase decisions).

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

Many manufacturers and dealerships advertise used vehicles as “certified pre-owned,” supposedly guaranteeing to the customer that the vehicle is in good working order and free from major structural damage, including previous accidents. Often times, however, dealerships misrepresent used vehicles that have suffered previous accidents, structural damage (or other conditions that would preclude certification under the dealership’s advertised standards) as “certified” vehicles – misleading customers into paying a premium price for a damaged product.

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

Another source of income to dealerships is the markup which they obtain on financing packages or loans that they provide to their customers. Typically, dealers will buy credit at a wholesale price and then sell it to their customers at the retail price by adding 1% or 2% markup on the moneys financed. Typically, dealers are not required to disclose such markups by law, nevertheless this so-called service which has been provided to you is actually a significant profit center for the dealership.

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

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]

Sometimes dealerships sell cars that were previously wrecked or salvaged without disclosing this to the consumer. If you purchased a used car or truck and you believe it may have been in a serious accident before you bought it, we suggest you take the following steps. First, take the car to a body shop and ask for an inspection and report. Ask that the frame be measured. If the frame is bent or the vehicle has safety-related problems, you may contact us to discuss your possible case against the dealer. Salvage vehicles have been in such a severe accident that the insurance company or leasing company “totaled” the vehicle (paying off the consumer and taking title). These vehicles are supposed to be repaired at licensed repairers and then checked for safety. If they pass the safety inspection, they may be sold with full disclosure of their salvage status. The insurance company that totaled the vehicle must brand the title with the word “salvage.” If you were sold a salvage vehicle, and did not know it to be salvage at the time of purchase, contact us

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

www.DealerFraud.org]