The purchase of a new or used automobile can be a positive experience but unfortunately some automobile dealerships do not always operate in the consumer’s best interest. Due to increased competition among dealers, the pressure to make as much money possible from each sale has created a “buyer beware” market. State and federal consumer protection laws have been enacted to ensure the buyer is protected; however, a savvy consumer should be aware of what to look for BEFORE signing any sort of contract or agreement.
Please review the types and tactics of fraud that may be found during a used vehicle purchase and our list of tips that follows. If you think you have been a victim of any of these practices, call Weisberg & Meyers at 888-565-3666 now for a FREE Fraud Case Review or fill out our fraud case review form.
- Odometer rollback or odometer fraud – Occurs when the true mileage of the vehicle is hidden by setting the mileage numbers on the odometer back to a lower number, thus making the vehicle more “sellable”.
- Salvage fraud - When a car or truck is damaged by a wreck, flood or fire and the
damage is so severe that the insurance company has branded the title as a total loss or “salvage” and this is not disclosed to a buyer before purchase.
- New vehicle accident damage - A new vehicle may have suffered body damage prior to sale. This may occur at the factory, on the transport truck en route to the dealer, or at the dealership. Many states have specific statutes requiring disclosure of this damage where it exceeds a certain percentage of the M.S.R.P. Even states that don’t have specific disclosure requirements consider failing to disclose damage a fraudulent practice as well.
- “Lemon Law Buybacks” –When a manufacturer buys back a vehicle that
is a “lemon” and it ends up sold to another unsuspecting consumer who is unaware of the vehicles prior history. This is considered a fraudulent practice in most states. When the vehicle is sold to a buyer, the dealer will usually deny any knowledge of its lemon past, despite the availability of its complete prior history, available in what is known as a “warranty history report.”
- Prior rental, undisclosed or misrepresented history – If a vehicle was used as a rental car and the dealer fails to disclose this fact or tells you that it was “executive driven” this is considered deceptive and is a form of fraud. Who would buy a car knowing it had been owned by “Hertz” or “Avis” and driven by countless drivers?
- “Title Washing” - Many states require that the title be branded to show that a vehicle has been bought back by the manufacturer, was previously salvaged by an insurance company, or had its odometer rolled back. However, some states do not have these requirements, making them havens to wash away the vehicle’s prior negative history so the vehicle can be passed to you without disclosure of the vehicle’s past. Included in this area of fraud are gray market vehicles, or Canadian vehicles imported to the United States, that are often stolen, were given salvage titles, had flood damage or have liens on them in Canada. The majority of vehicles coming across the border have some problem that makes their importation illegal, though they are sold to the consumer as new with a “clean title”.
- Financing scams – The practice of “spot delivery” or “yo-yo sale," happens when the dealer allows the consumer to take the vehicle home promising one finance rate and then attempts to change the financing to a higher rate claiming they could not get the buyer financed at the promised rate. Often, the dealership claims to have “disposed of” the buyer’s trade in before getting financing approved, thus making it impossible for the buyer to get their old vehicle back, forcing them to agree to a higher interest rate and a new deal. Negative equity occurs when a potential buyer of a vehicle owes more money on the vehicle than its current trade-in value. The law says that any negative equity on a trade-in must be disclosed by the dealership to the customer. A negative equity scam could involve a dealer informing the buyer that they are “paying off the difference” when in fact the amount is rolled back into the price of the vehicle and not disclosed up front to the buyer.
The prior history of a used car is also often easy to investigate. CarFax.com or Autocheck.com generally provide a simple way to research a vehicle's past history if you have the V.I.N. (vehicle identification number) of the vehicle you intend to purchase. An honest seller or dealer would not hesitate to provide you with a vehicle history report, or you can get one yourself by looking for the V.I.N. in the upper left hand corner of the vehicle’s dashboard and then running the report yourself.
Tips to Protect Yourself From Becoming a Victim Of Consumer Fraud
You CAN protect yourself from becoming the victim of consumer fraud.
- Make certain to get all promises in writing. If the seller has promised something verbally that isn't in the contract, ask him to put it in writing, as written promises are easier to enforce than those made verbally.
- The seller should be willing to put in writing anything he promised - if he won't, you may be better off doing business with someone who will. Investigate the company you are considering doing business with before you enter into the contract. Your state attorney general’s office often keeps lists of consumer complaints against local companies as does your local Better Business Bureau.
- Never sign a contract under pressure. Don't just sign it because it was set in front of you, spend some time reading it over carefully. If you do not understand it (and there are LOTS of contracts that are hard to understand), do not feel "stupid" and sign it assuming it must be O.K. Get someone you trust to explain it to you. Tell the salesperson you want a copy of the contract to take home and read overnight. If they refuse to do this, would you really want to do business with them?
- Do not respond to pressure in a sales situation. If you feel a salesperson is pushing you, step back or leave if you have to. Take a friend with you and discuss it with him or her, away from the salesperson and if need be, away from the dealership.
- Take your time; do not buy on impulse. Consider carefully any major purchase by going to different places and comparing prices. Never rely solely on what the salesperson is saying.
- Make sure the contract says exactly what you think you have agreed to, and exactly what the salesperson has agreed to. Be very sure that all promises are written right on the contract. Do not be afraid to write them in on the contract yourself. Hand-written additions are fine as long as they are initialed by all parties to the contract. Moreover, do not sign a contract which contains any blank spaces, make certain to put a line through any blank space before you sign.
- Do not rely on spoke or unwritten promises as these are often impossible to enforce. If the seller refuses to let you put his or her promises in writing, assume this is a bad sign and take your business elsewhere.
- Be careful of any deal that sounds too good to be true, as it probably is too good to be true, go with your instincts and do not go through with the deal if you have any misgivings.
What to do Now
If you think you have been a victim of auto fraud or any sort of consumer fraud, call us at 888-565-3666 or fill out our FREE, online Fraud Case Review form. Apathy and inaction is the exact situation that all dishonest sellers seek from consumers, and our office believes pursuing the monetary compensation applicable laws make available helps not only yourself, but other consumers as well by showing big corporations they will be held responsible for not honoring their promises Stand up for your rights under the law, do not let unscrupulous dealers get away with deceptive sales practices any longer!