Purchasing a new vehicle is considered a milestone in many people’s lives. It requires a tremendous amount of upfront research, from selecting a brand, to test driving cars, to selecting finance options. Dealer Fraud is a different type of legal issue than auto defects and recalls. Lemon law protects consumers who experience a nonconformity such as a car defect after the sales transaction. Dealer Fraud, on the other hand, happens before the sale of the vehicle and during the sales process. Consumer protection falls under state and federal laws that prohibit fraudulent and deceptive trade practices. Dealer fraud can happen when a consumer is purchasing a new car, a used car or when they are applying for car financing.
Common Dealer Fraud For New Cars
There are several ways for aggressive car salesmen to commit dealer fraud when a consumer is trying to purchase a new car. Some of the ways this can occur include but are not limited to:
- The salesperson inflating the total price above the invoice or sticker price. The salesperson can achieve this in two ways: by concealing options the consumer did not request or by including undisclosed fees
- The salesperson falsely states that optional features are required
- The dealership is advertising a certain price but the salesperson tells the consumer that the advertised deal is no longer available and then attempts to sell the consumer the same vehicle at a higher price. This is commonly referred to as “Bait & Switch.”
- The salesperson undervalues or underpays the consumers trade-in vehicle
- The salesperson falsely represents a used vehicle as new
- The salesperson represents a new vehicle with options it does not have
Common Dealer Fraud For Used Cars
Dealer fraud can also be committed when someone is purchasing a used car, including but not limited to:
- The salesperson failing to disclose past damage from an accident, floor or fire
- The salesperson misrepresenting total mileage on through odometer rollbacks
- The salesperson representing a used vehicle with options it does not have
The “Used Car Rule” is a federal regulation that requires used car dealers to disclose certain information to consumers. It states that the used car dealership is prohibited from making false statements, misrepresentations and other unfair practices in connection with the sale of used cars. It also states that there must be a notice posted in the window of used vehicles offered for sale that states the dealer’s name, contact information, the make, model and vehicle identification number (VIN) as well as express any warranties (including what is covered and for how long).
Common Dealer Fraud Related to Auto Financing
Even if the consumer is presented with correct information about the vehicle, dealer fraud can happen during the finance portion of their transaction. Dealer fraud can occur when:
- The dealership misrepresents a consumers’ credit score or the consumers’ eligibility for financing in order to get him or her to a higher interest rate or other unfavorable terms
- The dealership falsely states that a consumer who is leasing a vehicle will own the vehicle when he or she is finished making payments
- The dealership allows a consumer to drive off the lot with a vehicle, while the consumer has a false belief that their car loan application is pending. Then the dealership requires the consumer to return and sign a different, more expensive loan. Then the dealership backdates new financial documents to the original purchase date to cover it up. This is commonly referred to as “Yo-Yo Financing.”
Contact Our Lemon Law Lawyers
In the event that you feel that any of these events occurred, the first step is to have your attorney contact the dealership and give them an opportunity to correct the problem. The contact should be a formal letter and clearly illustrate the problem (for example, the salesperson failed to disclose information) and what steps you’d like the dealer to do in order to resolve the problem. If they do not take steps to remedy the situation, our lawyers can help you prove fraud and help you collect damages. We will help you prove that the dealer omitted or misrepresented material facts that resulted in a financial loss when you purchased the vehicle. A general rule of thumb is the “but for” test. For example, but for the omitted or misrepresented facts, the customer would not have purchased that vehicle. We will work with the courts to get you a remedy to your situation that makes the most sense such as returning the vehicle or a refund of all payments made toward the purchase. If you’ve been a victim of dealer fraud relating to auto financing, we can help you cancel any outstanding balances or obligations. Contact one of our lemon lawyers to start the dealer fraud claim process.