Dealer Fraud

The car loan markup scam is costing new and used car buyers as much as one billion dollars a year!

If you choose (its always a choice) to finance your car through the dealer you bought it from, then you may possibly experience this car finance scam.

Based on your credit rating, the dealer will often add points to your car loan. Those points are then kicked back to the car dealer from the lender.

This is an industry wide practice and can easily add $1000.00 or more to the cost of your vehicle and cost many thousands more over the life of your loan.

A study done of only one of the major car manufacturers finance companies revealed that almost 50% of their customers were accessed this charge.

This study was based on over 300,000 customers over a seven-year period and cost those consumers as much as 200 million dollars.

There is also evidence to show that the car loan markup scam is passed on to minorities more often and at a higher percentage rate.

How is it that this car loan markup scam is not widely known? Simple, the car dealers are not required by law to disclose this fee.

Knowledge is power, but only if used. So here’s how to avoid the inevitable whining and sniveling that will follow later when you realize you’ve ALLOWED yourself to be a victim of the car loan markup scam…

To avoid the car loan markup scam, don’t let a car dealer tell YOU what YOU have on your credit rating! The dishonest ones will lie and tell you that your credit score is too low and then charge you a higher interest rate.

If you’re thinking of going to the car dealer blind (not knowing whats on your credit reports) then just know that the few dollars you spend on your credit reports now could save you literally hundreds of dollars of the life of your car loan.

Even if you insist on getting a car loan from a car dealer you really won’t know if you’re getting a good deal or not unless you have something to compare it to.

It has been estimated that this car scam costs consumers as much as one billion dollars a year!

The car dealer will often add points to your auto loan based on what they say is in your credit rating. Those points are then kicked back to the car dealer from the lender.

This is an industry wide practice that can easily add $1000.00 or more to the cost of your vehicle and cost many thousands more over the life of your loan.

If you’re buying a used car, whether from a dealer or someone who put an ad in the paper, you’ll want to know as much about it as you can.
Even without anyone trying to deceive you, the vehicle may have problems you can’t see from a simple visual inspection or even a short test drive.
A vehicle history report prepared by a third party is one way to know what you’re getting.
Combining information from state DMVs (Departments of Motor Vehicles) and RMVs (Registry of Motor Vehicles) as well as police reports and other sources, a vehicle history report can give you a comprehensive overview of where the car’s been.
Here are some things to look for — or look out for — when you get a report on a vehicle. None of these things is necessarily a reason not to buy a car, but you shouldn’t make a decision without asking about anything you see on a vehicle history:

Many owners
The more garages a car’s been in, the less likely it’s been lovingly cared for all its life. Not everyone is as responsible about car care as you are. Rental cars and former taxis, for example, will often have undergone a lot of abuse, although they tend to be quite inexpensive.

This is one of the oldest auto repair scams in existence. These “Highway bandits” own, or work for service stations. They prey on motorists who stop for gasoline or air or water. There are numerous ploys they attempt to separate the unsuspecting motorist from their money. They’ve been known to spray oil or drip it under a vehicle then claim that it leaked from the traveler’s car. They’ve punctured tires, cut water hoses, and fan belts so that the motorist will have to buy new ones. These bandits focus on the danger the traveler faces if they drive off without making the repairs and often charge inflated prices.

Any time you are out shopping for a vehicle and you find one that looks great but is priced far below the going rate it’s time to be cautious. If the car is in good condition there is no need to sell it for so cheap because they’ll eventually find someone willing to pay a fair price for it. There are certainly valid reasons for a person to sell a car below the going rate but this is something that should raise red flags and lead you to try and find the reason from the person selling the car. If you are given a particularly weak answer you should start wondering what’s wrong with the vehicle.

• Gravel or sand in the interior and especially under the dashboard
• Electrical problems
• Priced lower than fair value
• Vehicle History Reports may indicate if the car suffered previous water damage.
• Musty smell or too much air freshener
• Car is from New Orleans

Anytime you purchase a used car it’s a good idea to have a trusted mechanic take a look at it before you buy. These inexpensive pre-purchase inspections are inexpensive and can save you a tremendous amount in the long run.
Car history reports fill you in on a vehicle’s history before you buy. The data collected about a vehicle can tell you a lot about it’s current condition. Make sure you are armed with all the facts before purchasing a used car.

Sales Meetings at Dealership
This is usually a morning pep rally where management pumps up the sales staff, tells them what iron (a vehicle) has the spiff’s (cash bonus to the salesman who sells it first), and other promo’s.

Meet and Greet the Customer
“Lot lizards” (salespersons) are generally required to pounce on the customer the minute he steps foot on the lot but, of course, by using businesslike polite language and introductions.
Tip: Make no mistake about it. Their only goal is to sell you a vehicle for the most they can get out of you. Salespersons are paid on commission … the higher the price they get you to pay, the more money they make.

Risky Credit Rating: The dealership implies your credit is riskier than it really is but will then offer you a sweet deal by stating they will take a chance on you. Result: a much higher interest rate and guess who gets the extra income.

Spot Delivery or YOYO Selling: This is one scam these dirty dealers try the most often. The dealership appears to agree to your terms, sends you home in the vehicle, and then calls you to say the terms haven’t really been approved. When you return to the dealership they re-write the whole deal and you end paying a lot more than originally planned and can go hand-in-hand with the Risky Credit Rating ploy above.

Reduction of your trade-in value: The dealership will determine that your vehicle is worth a specific amount to them. Then they will explain what extra costs they will have to spend to make your trade-in ready for resale. They offer you much less than what it is really worth. If you agree to the offered price you just gave the dealership hundreds of dollars in extra profit.

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.

Most of them have the exceptions, while you can better find the extended auto warranty packages from the company at lower cost. Look at the benefits and what it covers because this extended auto warranty has the exceptions and exclusions. Extended auto warranty depends on the plan and type of warranty you choose from the company or manufacturer.

There are different types of extended auto warranties; where it includes the vehicles that are covered with wear and tear that has parts like brake pads, shoes, hoses and clutches. It also covers bumper to bumper services for all the parts of the vehicle. How ever there is some exclusion where it does not cover glass, exhaust systems, tires, airbags, brake rotors, drums etc.Though you purchase your extended auto warranty, your vehicle should be maintained in accordance with the manufacturers or the dealer specification and sometimes there are problems in obtaining repairs for your vehicles, because service contract restricts the choice of repair facility and insist on payment from the consumer.This extended auto warranty plays a key role for filing the claims before an emergency arises, so have a thorough checkup with the procedures and you must be able to provide the proof to service contract administrator that the vehicle is maintained, because they may end up at insurance companies, when dealing with the claims.

These are the stories of dealer fraud victims of former Whitehall Discovery Ford owner/manager Tony Nielsen, sentenced to jail for felony fraud.
Nielsen has confessed to defrauding hundreds of customers of more than $300,000 through an extended warranty scam and failure to pay off loans on traded-in cars. He pleaded no contest last month to three counts of larceny by conversion of more than $1,000 but less than $20,000.

Prosecutors said more charges would not have lengthened his sentence.
Judge ordered Nielsen to jail for 10 months, with eligibility for work release — but only for 48 hours a week, if he gets one. The judge vetoed a defense request that Nielsen, 43, now of Wayland, either get extra time off jail to work at an existing job in that area, 100 miles from here; or continue his current trade of flying around the country conducting “tent sales” for days at a time.

Judge also placed Nielsen on probation for 30 months, ordered him to perform 100 hours of community service in the County, and ordered him to pay full restitution to his victims.
Much of that has already been paid — more than $300,000 worth, authorities say. Judge also ordered Nielsen to pay another $78,052 to Universal Warranty, the insurance company that covered the extended warranties. Additional restitution to other victims will be determined later.

Authorities say Nielsen began keeping customers’ payments for extended warranties without buying the policies, and failing to pay off the outstanding loans on traded-in cars, so he could pay his own creditors’ bills when his business began to falter about three years ago.
The dealership also failed to forward customers’ payments for “gap insurance” to cover the difference between the value of a car totaled in an accident and the amount owed on a new car.

At the time of the frauds, from April 2005 through August 2006, Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall in Whitehall Township. The dealership has had a new owner since November 2006 and a new name, Whitehall Ford. Nielsen has no connection to the current dealership.
The criminal case was the outcome of a complicated, yearlong investigation by the state police that included repeated interviews with more than 400 people. Investigators also painstakingly scrutinized reams of financial documents.

The investigation began in August 2006 after police were contacted by a customer who had taken a vehicle to another Ford dealer for service and learned the car never was registered for an extended warranty. Investigators quickly found Nielsen’s dealership had failed to forward money paid by customers for the warranties. In many cases, the payment was $2,000.

Nielsen’s victims say his criminal actions ruined their credit ratings and, at least for a time, their lives.
The consequences for some included garnisheed paychecks, daily calls from creditors and the inability to borrow money — all because they were innocent victims of a crime.

“He robbed us of our credit-worthiness,” said victim Cindy Guerrero. “He robbed us of our life … Our creditors, they’re hounding us all the time.”

Guerrero and fellow victim Mary Beth McDonald spoke to Judge in court before sentencing. Both bought vehicles from Discovery Ford; both traded in their old vehicles to the dealership; and both — like some two dozen other customers — were burned when Nielsen failed to pay off the liens on the old cars.

Like other victims of the crooked dealer, Guerrero and McDonald found their lives turned upside down soon after buying vehicles from him.
McDonald told a financial and emotional horror story in court.
The young Fremont resident, now 27, was five months pregnant with her fourth child when she bought a minivan from Discovery Ford in April 2006 because she needed more car seats for her growing family.

Within two weeks, she got a letter from the credit union that had the lien on the smaller car she had traded in: She was past due on a payment for a car she no longer owned.
“So I called Discovery Ford,” she said. “They said, ‘The check’s in the mail.’”
It wasn’t.
After considerable back-and-forth, none of which got the loan paid or satisfied the credit union, she and her husband, Nick — both names were on the old loan — were sued. Eventually the credit union won a default judgment because McDonald missed a court date — she says she wasn’t notified of the hearing — and by December 2006 her paychecks were being garnisheed. She hired a lawyer. It didn’t solve the problem but added a new $880 bill.

In the meantime, she got a surprise. On the very day in August 2006 that she entered the hospital for the birth of her son, Travis, she heard the news: Discovery Ford was being criminally investigated. Soon she was telling her story to investigators.
But it didn’t ease the McDonalds’ plight.

Because of the judgment, their credit rating was ruined. Recently they submitted to credit agencies a letter from a County Prosecutor, provided to all of Nielsen’s victims, attesting that they were victims of a crime.
Mary Beth McDonald hopes that succeeds, “so that I’ll be able to apply for loans.”
McDonald, Guerrero and other individual victims also will be awarded restitution after the correct amount is decided. Hicks ordered that determination to be made by Feb. 15.

In court, Senior Assistant Prosecutor argued passionately for the toughest possible sentence — in this case, a year in jail, which would have been above sentencing guidelines.
“These innocent individuals are still fighting with their credit reports, and they didn’t do anything wrong,” Hilson said. “These folks’ trusts were violated. They got screwed.”

Nielsen declined the opportunity to speak. Defense attorney argued for leniency, given the ex-dealer’s ongoing efforts to pay complete restitution once he was caught.
The judge said restitution “doesn’t wash away the crime.” Hicks said when Nielsen’s business faced tough times, the car dealer responded by turning to criminal acts that victimized others.
“You exported the hurt to people who are less able to bear it,” Judge said.

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