Detecting Car Fraud and Dealership Rip-Offs
Rule Number 1: Get a consumer lawyer to check your contract and car history – always.
The first thing to know about car fraud rip-offs is that you are likely never to discover most of them yourself until it is too late. Car dealers can be experts at breaking the law. From repainting cars to hide accident damage, to putting illegal charges in your contracts, most dealer frauds are beyond the ken of the average consumer. Many of the illegal and undisclosed charges, are probably beyond the perception of even the keenest consumer.
Don’t leave anything to chance, contact a lawyer who specializes in detecting dealership fraud — every time you buy a car. They may be able to catch the rip-off early and avoid losses to you down the road.
Rule Number 2: Nearly every car deal involves at least an attempt to rip you off.
From negotiating only on the basis of monthly payment, to packing you with incredibly overpriced service contracts, GAP contracts, surface protection, or security systems, nearly every dealer is out to rip you off. Just check with us (or with your bank) and find out how many hundreds or thousands you were overcharged!
Rule Number 3: Knowledge is Power – Read these Common Car Dealer Frauds:
1) Not-So-Certifed After All: Most manufacturers and dealerships advertise used vehicles as “CPO,” “Certified,” or “Certified Pre-Owned” vehicles. Why? Because consumers have been shown to pay 3 to 4 thousand dollars more for these vehicles! Dealers, however, too often just pay the manufacturer for the right to advertise cars this way, but then don’t do the inspections and repairs they require. Manufacturers often just wash their hands once the price is paid, despite doing little or nothing to monitor dealer abuse.
2) Calling You In For A “Re-Write”: Being called back in to “sign some documents” after you thought you bought the car? Watch out! This is one of the times most fraught with fraud. Contact a qualified consumer attorney immediately if this happens to you. Under most dealership contracts, the dealer can only cancel the sale within 10 days. If they don’t, they may become the lender until they can find someone to buy the loan from them. We have seen numerous cases where dealers tried to scare consumers into signing contracts they didn’t have to, and almost always misrepresent the consumer’s rights in these situations.
3) The “You Have To Sign A New Contract” Scam: If a dealer EVER tells you this, contact a consumer lawyer immediately. You have rights and they are almost certainly wrong.
4) Backdating the Contract: Did you get called back in to sign a new contract? Was the date on the second contract the same as the first, even though you signed them on different days? Contact a car fraud attorney immediately to find out if your rights have been violated.
5) Charged For A California Tire Fee On A Used Car: If so, you should contact a consumer lawyer immediately. Only new tires are subject to the fee. If you were charged the fee for a used tire, you may be entitled to your money back and much more.
6) Over-Sticker-Price Sales: The vehicle code states that a dealership cannot sell a new vehicle for more than sticker price (a.k.a. the manufacturer’s suggested retail price, or MSRP) unless there is a dealer addendum sticker disclosing itemized costs above MSRP physically affixed to the car. Inflating the cash price of a vehicle – as in the case of a negative equity deal (see above) often results in selling a vehicle for higher than the MSRP, while also affecting the amount charged for taxes, licensing & registration and finance charges.
7) No Translations Into Spanish (Or Other Language) Sales: California Civil Code § 1632 states if a lease or purchase of a vehicle is primarily negotiated in Spanish, then a Spanish translation of the contract must be provided to the customer prior to signing the English-language contract. This law was recently expanded to include Chinese, Vietnamese, Tagalog and Korean. Failure to comply gives the customer the right to rescind the transaction.
8) Phony/Hidden Car History: Car dealerships are required to disclose important facts to you that they know about the cars, trucks, and vans they sell. For example,
- Was the vehicle involved in a prior crash or accident that caused substantial damage — car dealers are experts at disguising damage
- Is the vehicle a prior rental car – no one pays the same for a rental car, dealers buy cheap and sell high
- Is the vehicle a ‘lemon law buy back,’ meaning the vehicle was repurchased by either the manufacturer or dealer under the lemon law because of a defect – these cars can be dangerous
- Is the odometer not accurate or not working – non-disclosure9) “New” or “Used”: California law requires that a dealership describe the vehicle being purchased as either “new” or “used.” Although the “used” designation applies to demonstrator vehicles (e.g., “demos,” vehicles used by manufacturer or dealership representatives) and “unwinds” (vehicles previously sold, then returned, usually because of financing problems), these vehicles are often represented as “new” to customers. Call a fraud lawyer immediately if you suspect this happened to you.10) “Hey, That’s Not My Signature” — Forgery: Dealerships sometimes forge the signature of customers on contracts to change the terms. Other commonly forged documents include: credit applications (with fraudulent representations about income, etc.), as well as buyer’s guides and disclosure forms (to prevent buyers from reading their buyers’ rights and/or information that may cause them to reconsider their purchase decisions). Call a consumer fraud attorney immediately if you suspect this happened to you.11) “Hey, That’s Not On My Contract”: California law provides that all obligations of both parties in a transaction must be contained in a single document (which explains why purchase agreements are so long in the auto industry). Often, however, dealerships will have customers sign additional documents, such as trade-in forms stating that the customer agrees to pay any difference between the value of their trade-in vehicle and the amount owed on that vehicle. Or, the dealership will agree to make payments on a trade-in vehicle but not include the trade-in vehicle in the purchase agreement. Another example is a “hold check agreement” where the customer agrees to pay additional money towards the down payment on a later date. Sometimes you are sold insurance, but the insurance section of the purchase contract is not filled out. These are all very serious violations of California law.12) “Dragging the Body”: Did the dealership send you to a particular bank or other lender to get your car loan? If so, your rights may have been violated. Call a consumer fraud lawyer to find out.