1. What is auto dealer fraud?
2. Common Dealer Fraud Situations.

• Inflating a vehicle’s invoice price.
• “Bait and Switch”.
• Terrible “Add-Ons”.
• Vehicle Trade-Ins.
• “New” Dealer Returns.
• Flood-Damaged and Salvaged Vehicles.
• Odometer Rollback.

3. Auto Dealer Fraud and Lemon Law Case Differences.
4. Auto Dealer Fraud – Enforce Your Rights.

• Contacting the dealer.
• Filing a complaint with a state agency.
• Getting an attorney’s help.

5.  Auto Dealer Fraud FAQ.

• What is “auto dealer fraud”?
• How does a “bait and switch” occur?
• What kinds of things must used car dealers disclose about a used vehicle that is being offered for sale?
• What is a mileage “rollback”?
• How do auto dealer fraud cases differ from Lemon Law cases?
• Should I contact the dealer if I feel that a car salesman committed fraud when I bought a car?
• Can I file a lawsuit for auto dealer fraud?

6.  How to avoid dealer fraud?

• Do Some Research.
• Don’t Buy Based on Monthly Payments.
• Know When to Walk Away.

What is auto dealer fraud?

“Auto dealer fraud” is a term for describing automobile dealers’ deceptive and unlawful practices at almost any stage of the vehicle purchase process – from advertising, to negotiation of vehicle pricing and financing terms.

Common Dealer Fraud Situations

Auto dealer fraud can occur at almost any stage of the vehicle purchase process, from advertising to signing on the dotted line. Here are some common situations that can give rise to auto dealer fraud:

•    Inflating a vehicle’s invoice price – The “invoice” is the amount that the auto dealer is charged for the vehicle, by the vehicle manufacturer. Examples of non-proper inflation of the invoice price include making additions to the invoice figure, when those charges were originally included in the invoice price (i.e. “destination” charges).

•   “Bait and Switch” - A form of false or deceptive advertising, in which a car dealer lures customers to the dealership by advertising one vehicle at a certain price, then tells the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle (or the advertised vehicle at a price higher than the advertised price).

•    Terrible “Add-Ons” - Concealing the inclusion of certain optional “add-ons” during the negotiation process, or the costs of those add-ons, but including those add-ons in the final vehicle price.

•    Vehicle Trade-Ins – Undervaluing and/or underpaying for a car buyer’s trade-in vehicle.

•    “New” Dealer Returns - Selling as “new” a vehicle that was actually returned to the dealer because of a defect or persistent mechanical problem or was returned shortly after purchase for some other reason.

•    Flood-Damaged and Salvaged Vehicles - In used car sales, failing to disclose that a vehicle has been designated “salvaged” after a car accident, or has been flood-damaged.

•    Odometer Rollback – In used car sales, odometer “rollbacks” are intended to conceal a vehicle’s actual mileage.

Auto Dealer Fraud and Lemon Law Case Differences

Auto dealer fraud cases differ from Lemon Law cases. In auto dealer fraud cases, improper tactics used by the car dealer during the vehicle sale process are the focus. Lemon law cases arise from problems or defects with the vehicle itself.

Auto Dealer Fraud – Enforcing Your Rights

If you believe that you may be a victim of auto dealer fraud, there are a number of steps you can take to enforce your legal rights:

•    contacting the dealer
•    filing a complaint with a state agency
•    getting an attorney’s help.

Contacting the Dealer. In many states, if you believe that auto dealer fraud was committed, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action (such as filing a lawsuit). This contact can be initiated by you personally, or it can be made by your attorney, but it should be in writing and should clearly illustrate both the problem (i.e. non-disclosure of certain financing charges), and what steps you would like the dealer to take to resolve the problem (i.e. a partial refund of the vehicle purchase price).

Filing a State Agency Complaint. If you believe that you may have been a victim of auto dealer fraud, you may want to file a complaint with a state agency that protects consumers’ rights in connection with vehicle purchases. In some states, that agency may be a consumer protection division of the state attorney general’s office, or may be an agency specifically designated to handle complaints regarding auto dealers.

Getting an Attorney’s Help. If you recently purchased a vehicle and you suspect that the dealer may have committed fraud during the sales process, you may want to speak with an experienced Auto Dealer Fraud Attorney. An Auto Dealer Fraud attorney will evaluate all aspects of your case and explain all options available to you — including what you can expect if you decide to file a lawsuit against an auto dealer — and will work with you to ensure the best possible outcome for your case. Remember that in some states, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action.

Auto Dealer Fraud FAQ

What is “auto dealer fraud”?

Auto dealer fraud” is a term that describes deceptive and unlawful practices used by automobile dealers, at almost any stage of the vehicle purchase process — from advertising, to negotiation of vehicle pricing and financing terms. Auto dealer fraud examples include “bait and switch” advertising practices, deceptive inflation of vehicle prices, and failure to disclose information about a vehicle.

How does a “bait and switch” occur?

“Bait and switch” sales tactics are a form of false or deceptive advertising, in which a car dealer lures potential buyers to the dealership by advertising one vehicle at a certain price, then tells the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle (or the advertised vehicle at a price higher than the advertised price).

What kinds of things must used car dealers disclose about a used vehicle that is being offered for sale?

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.

What is a mileage “rollback”?

A form of auto dealer fraud, a “mileage rollback” or “odometer rollback” occurs when the odometer of a used vehicle (which indicates the total miles the vehicle has been driven) is altered (or “rolled back”) to display a number that is lower than the vehicle’s actual mileage.

How do auto dealer fraud cases differ from Lemon Law cases?

Although both involve motor vehicles, auto dealer fraud cases are very different from Lemon Law cases. In auto dealer fraud cases, improper tactics used by a car dealer during the vehicle sale process are the focus, while lemon law cases arise from problems or defects with the vehicle itself.

Should I contact the dealer if I feel that a car salesman committed fraud when I bought a car?

You may be required to do so. In many states, you (or your attorney) must contact the auto dealer and give them an opportunity to correct the problem to your satisfaction, before taking any legal action for possible auto dealer fraud. This contact should be in writing, and should properly illustrate both the problem (i.e. non-disclosure certain financing charges), and what steps you would like the dealer to take to resolve the problem (i.e. a partial refund of the vehicle purchase price).

Can I file a lawsuit for auto dealer fraud?

In most cases, yes. If you recently purchased a vehicle and you suspect that the dealer may have committed fraud in the sales process, you may want to speak with an experienced Auto Dealer Fraud Attorney. An Auto Dealer Fraud attorney will evaluate all aspects of your case and explain all options available to you — including filing a lawsuit for your damages — and will work with you to ensure the best possible outcome for your case. Remember that in some states, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action.

How to avoid dealer fraud?

Do Some Research

Don’t be vague. Know which make and model that you are most interested in. Find out as much as you can about your car of interest including:

Pricing. Shop around for the best price. Always find out the sticker price, including any options and packages you want added. This will help you know how low the salesman will go. Make an offer and do  not back down. Remember, the salesman wants to sell you the car.

Cost of Ownership. Don’t end up buying a car that you can’t afford to drive. Check out the costs of Maintenance, Gas Mileage, Sales Tax, Depreciation, etc. You never know what your car costs you until you have bought it, owned it for awhile, and sold or traded it.

Don’t Buy Based on Monthly Payments

Another way to know how to avoid car dealer fraud is to be observant of loaded questions. “How much can you afford to pay each month?” This is usually one of the first questions that a salesman will ask. Do not let the dealer handle your financing. This is an area where dealers can manipulate the numbers and make quite a bit of money at your expense. Always try to have a pre-approved loan before you go into the dealership.

Know When to Walk Away

Knowing how to avoid car dealer fraud may result in simply not making the deal. Remember, there will always be other cars, other dealers, other offers. So, if you do not like the deal, or you need to think things over, you can just politely excuse yourself and leave. A car is a sizable investment, make it wisely.