Auto Fraud: Beware of Common Dealer Scams
» Print This Page- December 8, 2014
- Lemon Law / Car Problems
We have often represented clients who had become victims of auto fraud by local dealers. In many cases, we are able to obtain a satisfying outcome for our client, including a refund of money taken by the car dealer. This article provides valuable information for those trying to avoid becoming a victim of auto fraud, including both fraud relating to the vehicle, and fraud relating to the financing and paperwork.
Auto Fraud: Vehicle Issues
If you are looking to purchase a used vehicle, take your time, it is an important decision. Here are some important suggestions before you consider buying a vehicle to reduce your chances of becoming a victim of auto fraud:
- Take the vehicle to an experienced and trustworthy mechanic for an inspection – before you sign any documents. Also, make sure it’s an independent mechanic – not one next door to the sales lot and not one that’s “recommended” by the dealer. Although you will pay a modest amount for the mechanic’s time, it’s well worth it and can save you thousands in the long run.Ask for a written warranty. You are far better off if you get a written warranty, even if it’s only 90 days. And make sure that the documents you sign do not have any warranty disclaimers – if there’s a warranty, it should be in writing and the dealer’s documents should not say something to the contrary. If they won’t give you any written warranty at all, that tells you something – both about the vehicle and about the dealer selling it.
- Ask if the vehicle has ever been in an accident. If they can’t (or won’t) answer the question, or if they admit it has been in an accident, walk away. Chances are, it will save you a lot of time and aggravation in the future.
- Ask about the history of the vehicle: whether it has ever been used as a rental or fleet vehicle, and anything known about its service and maintenance history.
Auto Fraud: Financing and Papwerwork Issues
The above suggestions deal with the vehicle itself. However, there are also very important issues that relate to the paperwork and financing. Here are the top problem areas we have found:
- Don’t sign any documents containing an arbitration agreement. Arbitration provisions deprive you of your right to a day in court even if the dealership admits engaging in illegal conduct. If you are forced into arbitration, there is no judge and no jury. Your proceedings are essentially conducted in secret, and the arbitrator can simply ignore Florida and federal law. Simply put, the dealerships use an arbitration provision to prevent you from holding them accountable if they sell you a lemon or junk car, or if they deceive you or rip you off on the financing. If you see an arbitration provision in your paperwork – either as part of another document or as a separate document – tell the dealer you won’t sign it.
- Do not sign any blank forms. We have had instances where a person was told to sign blank forms because the dealer claimed they needed to obtain financing first; later, all sorts of false information was inserted without their knowledge.
- Arrange your financing with your bank or credit union before you go shopping for a car. The financing paperwork is where many car dealers make their profit: the profit on financing and “add-ons” such as GAP insurance or credit life insurance is often significantly greater than the profit on the car itself. Arranging for your financing ahead of time will make it less likely that the dealer can take advantage of you in the contract. For example, you are unlikely to be a victim of a yo-yo scam (bait and switch financing) where the dealer calls you back to tell you that your financing “fell through” and that you need to sign another contract. Despite what they say, you do NOT need to sign another contract.
