Unfortunately, car dealerships defraud consumers on a fairly regular basis. More often than not, these cases of fraud go completely undetected, and many consumers feel powerless or lost in how to take action against this sort of illegal activity.
[And, let’s not mince words here—car dealership fraud is illegal. There are consumer rights laws that specifically protect car buyers during their interactions with car dealerships. Matthew R. Osborne, PC is dedicated to using these laws to the full advantage of the consumer in cases wherein car dealer fraud is present and obvious.]
In our effort of safeguarding consumers in their search for a reliable, high-quality new or used vehicle, we’re going to show you three ways you can spot car dealership fraud on your own. By keeping a constant vigil against these unscrupulous activities, you’ll be doing your part to protect yourself from the many tricks that car dealerships try to play in order to sell more cars.
#1: “Bait-and-Switch” Pricing
This is probably the most common offence committed by car dealerships. What makes this kind of fraud especially easy is the internet, where classified car sales listings are often much, much lower than the price you’ll find if you show up to the sales lot.
Here’s how this fraudulent business practice typically pans out:
- The car dealership lists a vehicle for sale at a price that is uncommonly low for the age, mileage, and condition of the vehicle. Often, this listing will be indexed by multiple vehicle search engines, which gets it in front of potentially thousands of potential buyers.
- Once an inquiry is made on the vehicle in question, the internet salesperson at the dealership will try to schedule an in-person appointment with the car buyer and the on-site salesperson.
- When the consumer arrives at the car dealership to test drive the car, they find that the total vehicle price is actually a lot higher than the advertised price, often because of an “error” or “oversight” that the dealer tries to sweep under the rug. When this happens, the consumer gets ‘bait-and-switch’-ed.
- The car dealership salesperson tries to shoehorn the sale in anyway, using classic sales techniques that are often very successful. The result is a consumer paying much more than they would have liked to for their vehicle, while the car dealership makes yet another sale and laughs all the way to the bank.
If you encounter an instance of ‘bait-and-switch’ pricing, leave the car dealership immediately, and report the business to your local Better Business Bureau or Federal Trade Commission office.
If you notice this happening on a regular basis with the same dealership, keep a record of the advertisements you see, and consider hiring a qualified legal professional to assist you with further action.
#2: Financing Fraud
Many car buyers who need reliable transportation cannot afford to pay cash for a new or used vehicle. Car dealerships know this, which is why they’re often very eager to extend attractive financing terms to their customers.
Where this goes south is when the car dealership denies a credit application for favorable credit terms based on a low score—or at least, that’s what the story often is. With cases of fraud like this, the car dealership will try to sell the buyer on financing terms that pad the dealers pockets instead of giving the consumer a fair financing arrangement.
When the credit approval comes back ‘bad’ and the consumer knows their credit is good, there could be a case for fraud.
Remember to always know your credit score prior to car shopping, and consider getting a pre-approval for a loan from a local credit union, instead of dealing directly with the car seller.
#3: Vehicle Condition Misrepresentation
You may think that with tools like Carfax.com, the background and accident history of any vehicle should be public knowledge. While it is helpful to have an independent way to verify the condition and history of a vehicle, not all dealerships will disclose the true condition of a vehicle. This is especially the case within the secondary vehicle market, where used cars can turn out to be undriveable lemons after they’ve been purchased.
Many states have Lemon Laws that specifically protect consumers against this kind of fraud. However, not every car deal qualifies for a Lemon Law protection, and there are ways that car dealerships can dance around the rules in order to sell you a piece of junk.
Be especially wary of vehicle condition misrepresentation when salvaged or rebuilt titles are involved.
Hopefully we’ve given you some things to think about if you’re preparing to buy a new or used vehicle from a dealership. If you believe you may have a case against a car dealership because of fraudulent activity on their part, contact the legal team at Matthew R. Osborne, PC.