Man sitting in driver seat of new car and salesman giving him keys

Auto Dealer Fraud

Auto fraud is a method of selling cars using improper or illegal sales techniques.

These techniques can range from changing the mileage on the odometer to denying the vehicle was previously flooded or sold as salvage. These techniques are illegal in the United States, and can lead to punishment in a court of law. Understanding fraudulent car sales is an important step for anyone who is interested in buying a vehicle and imperative to understand if you are a car salesman and trying to avoid a run-in with the law.  If you find yourself involved with the law, you should contact a good bondsman.

What is Auto Dealer Fraud?

A variety of techniques are considered auto fraud. The auto dealership is responsible for clearly explaining the terms of purchase to the buyer. For example, the contract may have confusing language to hide higher-than-average financing fees. The process of purchasing a car is regulated to prevent the salesman from overcharging customers.

Like bail bonds, car dealerships must clearly state all the applicable fees and other terms of purchase clearly on their contracts. Confusing contracts and hidden fees are one example of auto fraud. Bait and switch techniques are also improper.

Bait and Switch Scams

In bait and switch scams, the dealership advertises a specific vehicle at a specific price. When the customer tries to buy the advertised vehicle, the dealership claims the vehicle isn’t available and tries to convince the customer to purchase another, usually more expensive, vehicle.

Another type of fraud occurs when dealerships don’t honor the 10-day grace period that allows the customer to change their mind about the purchase. A dealership that does’t honor this 10-day policy leaves customers paying for a vehicle they aren’t comfortable purchasing.

Warranty Fraud

Warranty fraud is another type of auto fraud. The dealership claims the vehicle is under a manufacturer’s warranty when the warranty is expired. Another type of auto fraud occurs when the dealership doesn’t offer a fair trade-in price. Low trade-in estimates combined with hidden fees or a bait-and-switch scam can easily cost consumers thousands of dollars.

Generally, any false claims, hidden fees or hidden vehicle information, such as not disclosing previous accidents, is considered auto fraud. Additionally, falsely advertising inexpensive vehicles to draw customers into the dealership is considered auto fraud. To avoid auto fraud, consumers should look for lists of fees and costs, rather than a lump sum number, on a clearly written contract that is easy to understand.

Lemon Laws and Auto Fraud

Generally, auto fraud addresses situations with the paperwork, salespersons or advertising methods a dealership uses to convince customers to make a purchase. Physically altering a vehicle, such as changing the odometer, is a type of auto fraud because it is a dishonest selling tactic.

The Lemon Law addresses situations that occur with the vehicle and its parts. Usually,the Lemon Law applies to vehicles that are sold with known defects. For example, if the dealership knows the motor is defective, but sells the car without disclosing the information, the consumer may be protected under the Lemon Law. Both the Lemon Law and auto fraud work to protect the customer from unethical selling practices.

How to Handle Auto Fraud

Consumers who experience auto fraud should consider hiring an attorney to assist them in resolving the issue. Typically, the dealership has the opportunity to resolve the issue before the consumer can take legal action concerning the fraud. Consumers should insist on a written contract with the problem and its solution clearly stated.

When the dealership isn’t willing to provide a written contract, or won’t offer a reasonable resolution, consumers have the right to file a lawsuit. Most consumers choose an experienced auto fraud attorney to represent them in court. An attorney can provide several options to reach a full resolution with the dealership, or the lawyer may write a contract that allows consumers to settle with the dealership in an out-of-court meeting.

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