Car dealer fraud is a term used to describe dishonest and unlawful practices that some car dealers use during advertising, price negotiation, sales and the financing of vehicles. This type of fraudulent activity can take place at any stage of the vehicle purchasing process. Unfortunately, many unsuspecting consumers do not realize that they are victims of car dealer fraud simply because they don’t know their rights.
Automobile dealers are obligated to ensure that the vehicles they sell are safe. They also must accurately present the vehicles they sell to customers prior to them being purchased. Unfortunately, not all car dealers maintain these honest business practices. When a car dealer fails to be honest with his/her customers, car dealer fraud is being committed. Thankfully, California has specific laws in effect which are designed to provide protection to victims of car dealer fraud.
Common Car Dealer Fraud Tactics
Car dealers are at an advantage from the start when negotiating with customers interested in making purchases. This is because most customers, including those with a fair amount of knowledge about automobiles, do not have a car dealer’s very detailed understanding of the specs, features and maintenance requirements of the vehicles on their lot. And, most customers are unaware of the fraudulent tactics used by car dealers to make transactions turn out in their favor. Some of the most common car dealer fraud tactics used include:
Hidden fees and other price hikes – One of the most common schemes dealers of new and used cars use is to inflate the price they paid for a vehicle in order to justify charging customers a high price. Some auto dealers will boost the price of a vehicle by adding fees to the sticker price which are associated with extended warranties, vehicle maintenance programs, etc but won’t tell a customer about these fees until it’s time to sit down and finalize the transaction.
Bait and switch – The old bait and switch trick is still alive and well among fraudulent car dealers. In this type of scheme, the dealer will advertise certain vehicles in order to lure people into their business, regardless if those vehicles he’s advertising are still available for sale or not. Then once someone comes in to look at one of the advertised autos, they will be talked into buying a completely different type of car – which costs more than the vehicle that was being advertised.
Advertising a used car as one that’s new – Some less-than-honest car dealers will attempt to disguise a recently returned vehicle as one that’s brand new even though the car has been recently owned.
Turning back the odometer – This is a car dealer trick that’s as old as cars themselves. A dishonest dealer will roll back the odometer numbers in order to make a car seem as though it has very little wear and tear on it due to the low mileage being displayed on the odometer.
Valuing a trade-in too low – It’s common for fraudulent car dealers to undervalue trade-in vehicles so they can turn a nice profit. Some dealers will tack hidden fees and other costs onto the final selling price in order to inflate the value of the car being purchased, knowing that the trade-in value will hide these underhanded price inflations.
Your Rights as a California Vehicle Consumer
In spite of California’s auto fraud laws that are designed to protect consumers, there are many dishonest car dealers who routinely and without much thought, cheat customers. The good news is that consumers are protected by strong, clear consumer rights. Here is a brief overview of your rights as a vehicle buyer or lessee in California.
Prior accidents – You have a right to disclosure of prior material damages to a vehicle. In other words, under law, a car dealer must tell you if a vehicle has been involved in any major accidents. If you ask a dealer about a vehicle’s accident history, he/she must provide you with an honest answer.
Prior history/rental vehicles – You have a right to know if a vehicle you’re interested in buying is a prior rental vehicle. This information must be physically posted on the vehicle at the time of the sale.
Buyer’s guide/used vehicles – Under law, you have the right to review, sign and receive a copy of a “Buyer’s Guide” on any used car you wish to purchase. The buyer’s guide must be physically posted on the vehicle at the time of the sale.
“Lemon” disclosures – You have the right to proper disclosure if the vehicle has previously been repurchased as a “lemon”. This includes an accurate description of the prior problems experienced with the vehicle.
Single sales document – You have a right to have all your agreements regarding price, payments, rights and remedies set forth in a single sales document (the sales contract).
Spanish translated contracts – If you negotiate a transaction primarily in the Spanish language, you have a right to a Spanish translation of the sale or lease contract and the buyer’s guide.
Many car buyers do not realize they were scammed by car dealers until long after the purchase is over. What many of these buyers do not know is that it may not be too late to take legal action. If you have been the victim of car dealer fraud wherein a dealer was not honest to you about price, down payment, monthly payment, the car’s accident history, rental status, warranty or something else, you may be able to file a claim against that dealer.
You may be able to return the vehicle you purchased even if several years have passed and get your money back. You also may be allowed to cancel any outstanding loan balances or obligations. If the dealer behaved especially shameful or exhibited predatory conduct, it’s possible that you would be allowed to file punitive charges against the dealer.
Steps to Take to Protect Yourself Against California Car Dealer Fraud
Before purchasing a used vehicle, protect yourself by taking these key steps:
Have the car inspected – Have the vehicle you’re interested in buying inspected by a trusted mechanic who has no affiliation with the seller. If you are not allowed to take the car in for an inspection, don’t buy it.
Obtain a warranty – If possible, get a written warranty for the vehicle you buy.
Ask for proof in writing – If the seller tells you the vehicle is mechanically sound, have him/her put those statements in writing. Without this written proof, it may be difficult to prove you were mislead about the condition of the vehicle.
Shop around for financing – Instead of financing a car through a finance company your dealer has a relationship with, shop around to see if you can find a better deal elsewhere.
Changing the terms – If you sign a contract to purchase a used vehicle and the dealer tells you later that you have to pay more than what was agreed upon, you do not have to do it. You have the right to demand your money back or insist on the terms you agreed to originally.
Manufacturer’s warranty – You still have rights under California’s lemon law even if you purchase a used car. If the vehicle is just a few years old, the original manufacturer’s warranty may still be valid and will allow you to bring a lemon law claim. If the vehicle was sold to you with a dealer’s warranty, you also can bring a claim that the warranty has been violated. Even if you bought the car “as is” without a warranty or service contract, you may still be able to bring a claim for used car fraud.
When to Seek Legal Assistance
If you ask the dealer for a refund, exchange or any service you are entitled to under a contract or warranty and he/she refuses to comply, you may need to file a lawsuit in order to get your money back. An attorney can help you recover:
- What you paid for the car and all its repairs
- Any money you spent on alternate transportation and,
- Other costs you had to pay because of the vehicle
Note: Your attorney also may help you get punitive damages if the seller exhibited extremely illegal behavior when selling you the vehicle.
The High Price of Car Dealer Fraud
It’s very common for someone who is buying a used car to drive it off the lot and then discover that there is something very wrong with the vehicle. Maybe the ‘check engine’ light comes on, the brakes don’t work as they should or the transmission stops shifting. This type of scenario happens frequently and it can be catastrophic as the unsuspecting buyer could cause an accident wherein he injures himself and/or others because of what was wrong with the car. A defective car that causes an accident can also claim innocent lives.
Don’t allow a dishonest car dealer to get away with fraudulent behavior. Contact the team at Hogan Injury as our attorneys have experience in handling California car dealer fraud cases. We will inform you of your rights and will work hard to help you recover your losses.