Dealer Fraud

Buyers of used or certified pre-owned vehicles sometimes mistakenly believe that they have no protections under the law when things go wrong with their purchase. They may have the misconception that only buyers of new vehicles have the protection of legal recourse in the event of dealer fraud. This is simply not true!

Know your rights, and take the right steps to protect them. If you have purchased a certified used vehicle and suspect you have been the victim of car dealer fraud, contact a dealer fraud lawyer for consultation.

A certified pre-owned vehicle is a used car that is run through a dealer’s inspection. If it passes the inspection, the dealer gives it a “certified” designation that extends the original warranty period.

A used vehicle is a car or truck that has been previously owned and still covered under the original factory warranty.

When it comes to used or certified pre-owned cars, consumers have the protections of California federal warranty law. There is a presumption period under state law that, within the first 18,000 miles or 18 months the vehicle should be taken back by the manufacturer if a certain number of defects arise.

When you purchase a used or certified pre-owned car, you rely on the dealership’s representation that the vehicle is in working order. You have the right to expect that the dealer will disclose any material issues about the condition of the car, including any history of accidents, repair or damage, as well as information about prior status as a lease or salvage vehicle.

Dealers have an affirmative duty under the law not to hide material facts about the vehicle from consumers. Concealment of important facts is fraud.

The dealer is supposed to provide accurate information about the car, even if you don’t ask. When this does not occur or you are given false information, you may have a fraud claim against the dealer.
Whether it is a fraud situation, it may be the manufacturer, dealer or both of these that may be held responsible.

When a new vehicle is sold, it becomes a used vehicle. That’s it. If the dealer cannot obtain financing for the person who bought the vehicle originally, then the vehicle “rolls back” and it becomes a used car. Many dealers will try very hard to represent this as a “new” vehicle. It is not, and everything about this vehicle is different than other cars. For instance, it’s the only vehicle on the dealer’s lot that MUST display both a MSRP label and a Buyer’s Guide form (the form that indicates whether a used vehicle has warranty). Additionally, if the vehicle costs less than $40,000 miles then the dealer must offer you the option to cancel the contract. These are not new vehicles. It’s really a liability for the dealership because of the gray area these vehicles fall into. If you bought one of these vehicles, then there’s a high likelihood that there was a auto draud somewhere along the line (just like the person before you was, most likely).
Big dealerships have to sell a lot of cars to maintain their profit margin, so they will get very creative. However, small dealers still need to get customers through the door and in order to compete they might turn to “aggressive” marketing. Plus, the retail auto industry is fairy homogeneous and the people move around fairly frequently (as in the case of the inside contact that inspired this post). The point is this - there is a reason that vehicle disputes and complaints is the reigning number one consumer complaint! That’s because consumers are getting ripped off by dealers.

Federal law requires that every used vehicle offered by a dealer (in this case, anyone who sells more than five vehicles a year) must have a Buyers Guide posted inside.

It has to include:

* Whether the vehicle is sold “as is” or with a warranty.

* A declaration of what percentage of repair costs a dealer will pay if there is a warranty.

* A reminder that spoken promises are difficult to enforce.

The Buyers Guide becomes part of the sales contract and should reflect any negotiated changes. In case of a conflict, it rules.

An example given on the Federal Trade Commission site: “If the Buyers Guide says the car comes with a warranty and the contract says the car is sold ‘as is,‘ the dealer must give you the warranty described in the guide.”

Want to buy a used vehicle that you can return for any reason and get your cash back?
Even if it’s just because you don’t like the color?
That may sound like a used-car scam, but it’s not.
It’s the law.
The California Car Buyer’s Bill of Rights, which went into effect in 2006, mandates that car dealers must offer a buyer a two-day return option on most used vehicles.
It’s just one of the legal protections that apply specifically to used-vehicle purchases.
But be warned: All of these protections, including the cancellation option, have loopholes. And most apply only to vehicles bought from dealers, not private parties.
Some parents are fond of proclaiming: “Buying a used car is buying someone else’s troubles.”
By knowing your rights, you can hedge your bets against Dad or Mom saying something even worse: “I told you so.”

The law requires that a dealership describe the vehicle being purchased as either “new” or “used”. A used vehicle also includes a “demo” or demonstrator vehicle (vehicle used by manufacturer or dealership representatives) but often the contract will state the vehicle is “new.” Also, some vehicles were previously sold but for some reason returned (usually because the failure to obtain financing) and this vehicle may also be used but is listed as new.

Also be cautious of the trade-in price being offered to you inasmuch as this represents a dealer’s greatest potential profit on the transaction. Because it is difficult to determine the value of the trade in vehicle, even by resorting to such things as the Kelly Blue Book and web sites and information to help you determine the price of your used vehicle, most consumers will be willing to accept a lower trade-in than what the vehicle is actually worth. Psychologically, once you are tempted to buy that new car your resistance has pretty well been lowered and you are more likely to accept a bad deal in your trade. The dealer will lead you to believe that they are actually providing a service to you by taking your old car off your hands. One way to get around this is to agree on the trade in price before negotiate for that new car so as to avoid getting caught in such a trap.

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In most states, car dealers must disclose whether a used vehicle has incurred significant damage in an accident, has been designated “salvaged”, or has been flood-damaged.

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

www.DealerFraud.org]

A 33-year-old Erin Mills man and a Sarnia woman are each facing 15 charges under the Motor Vehicle Dealers Act after damaged cars were sold to unwary buyers.
A joint investigation Ontario Motor Vehicle Industry Council (OMVIC) investigators and Halton Regional Police led to yesterday’s arrests. The OMVIC regulates the car dealer industry in Ontario.
The investigation was sparked by a complaint in late 2007 about a man who advertised a car for sale on the internet. When he met a prospective customer on Glen Erin Dr. in Mississauga, the man showed the car and indicated he had been the original owner. He provided a false Used Vehicle Information Package to the customer, which had been altered to conceal the car’s true history, police said.
The car being sold had been in a collision and “written-off” by the insurance company. The man had purchased the car from an auto-recycler.
Further investigation revealed that the man had sold vehicles in this manner some 15 times in the last nine months to buyers from across Ontario.
Andre Campbell and Sarnia resident Derby Lane are each facing 15 counts of being an unregistered car dealer. If convicted, the pair face fines of up to $10,000 and potential jail time.
In Ontario, all motor vehicle dealers and salespeople must be registered under the Motor Vehicle Dealers Act (MVDA) before engaging in the business of buying, selling or leasing vehicles. In the industry, unregistered individuals selling vehicles are known as “curbsiders” and are subject to prosecution.

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

www.DealerFraud.org]