Downpayment Fraud: Dealers Can’t List Unmade Payments

If the dealership says on the purchase contract that you paid money down when you didn’t, the dealership has violated the Truth-in-Lending Act, among other laws.   A Connecticut dealership that listed a fictional down payment on a customer’s sales contract has recently been found to owe the consumer damages.  Don Mallon Chevrolet Inc. in Norwich, Conn., must pay plaintiff Agdaliz Negron $1,000 plus attorney fees for violating the Truth in Lending Act, U.S. Magistrate Judge Thomas Smith said. After a nonjury trial, Smith rejected the store’s argument that it had merely made an inadvertent, “bona fide error.” The case involved the May 2007 purchase of a 2004 Chevrolet Impala, including a service contract, VIN etching and a GAP policy. With financing, the total sale price was $27,580.Documents listed a $250 down payment. In his decision, Smith said the $250 “fictitious down payment” resulted in assessing sales tax on that amount, making the extra sales tax “in reality part of the finance charge.” The award was a $1,000 statutory amount,  the maximum statutory award under the Truth in Lending Act.