Car Dealer Misrepresentation and Other Forms of Auto Sale Fraud

Buying a used car can be nerve-racking. Not only are you not sure about the quality of the vehicle, but you also have to deal with high-pressure sales techniques. Perhaps worst of all, you can fall victim to car dealer misrepresentation. 

At Robison Lemon Law Group LLC, we protect consumers against car dealer misrepresentation and other forms of auto sale fraud, scams, trips, and loopholes. To learn more, please get in touch with us. We can connect you with a lawyer to teach you about the legal rights you have when you buy a car and how to guard against auto dealer misrepresentation. 

What You Need to Know About the Federal Trade Commission’s Used Car Rule

Used car dealers must follow the Federal Trade Commission (FTC) Used Car Rule, which applies in all states except Maine and Wisconsin. This rule has been in effect since 1985. It stipulates that an auto dealer must display a window sticker, or Buyer’s Guide, on any used cars they sell.

The Buyer’s Guide must include details about whether a used car dealer offers a warranty on its vehicle. If so, the guide must define the terms and conditions associated with the warranty, including:

  • The duration of the warranty coverage
  • What percentage of total repairs costs that the dealer will pay
  • What car systems the warranty cover

The Used Car Rule is intended to stop auto fraud by requiring that dealers disclose information about the vehicle for sale. While nearly all used car dealers follow the letter of the law, there are plenty of tricks and scams that potential used car buyers need to know about. With a clear understanding of the ins and outs of car dealer misrepresentation, you can reduce your risk of purchasing a lemon car

Most Common Types of Auto Dealer Fraud Types 

One of the most common types of car dealer fraud is misrepresentation or false advertising. It occurs when a dealer fails to disclose or deliberately hides required information about a vehicle from the buyer. In this situation, the buyer may unknowingly purchase a car that has significant defects. 

To protect against auto dealer misrepresentation or false advertising, you should always run a Vehicle History Report (VHR) or Carfax report before you buy a used car. A VHR will provide you with plenty of information about the used car you want to buy, including: 

  • Who previously owned the car 
  • Accident history
  • Odometer readings at the time of sale
  • If the make and model have been labeled a lemon and are eligible for manufacturer buyback under lemon laws in your state

Robison Lemon Law Group LLC can answer your lemon law questions. If you believe you are the victim of car dealer misrepresentation and inadvertently bought a lemon, we can help you out. For more information about our lemon law legal services, please reach out to us.  

Odometer Rollbacks

Odometer rollback fraud is one of the oldest tricks in the automobile dealer fraud handbook. A VHR will tell you the odometer reading at the time the dealer purchased a vehicle. If the odometer reading on a used car and the VHR do not match up, the dealer is likely trying to fool you into buying a vehicle with more miles on it than you want.

Along with checking out a used car’s VHR, you can take a look at the vehicle’s title. In many instances, the number of miles on a car is listed on the title. If your car title’s mileage and the mileage listed on the odometer are out of sync, you may be the victim of odometer rollback fraud

Previously Damaged Vehicles

One of the most common car sale frauds involves quickly selling a vehicle that was recently involved in an accident. If the vehicle was in an accident and sold to the dealer within the last six months, the chances are good that it will still have a clean Carfax report since the accident has not been reported and filed yet. Meanwhile, you can use the information in a VHR to contact the previous owner and ask them if their car was involved in an accident before being sold to the dealer. 

Of course, if you purchase a used car with a “clean” VHR only to later discover its accident history, you have a valid basis for a claim against the dealer. At this time, you can hire an attorney to advocate for you as part of a lemon law claim. Your lawyer can help you get fair compensation based on your previously damaged vehicle. 

Bait-and-Switch

A “bait-and-switch” is the most basic form of false advertising. With a bait-and-switch, a dealer lures customers in with the promise of one vehicle at a low price. When the customers arrive, they are pressured to buy a more expensive vehicle.

Bait-and-switch also means selling an advertised vehicle for a higher-than-advertised price or switching the advertised vehicle for one with a lesser value. If the price on the contract is not the price advertised or the one you agreed to, the dealer is probably trying to pull a bait-and-switch. Fortunately, you are protected by state consumer protection laws. 

Before going to a dealership in search of a too-good-to-be-true price, check reports and complaints with the Better Business Bureau (BBB) to see if they have a history of using bait-and-switch tactics. If you believe you are the victim of a bait-and-switch, you can share your concerns with an attorney. Next, your lawyer can help you file a claim against the dealer. 

Most Common Auto Dealer Fraud Types: Add-Ons, Overcharging, and Undervaluing

While car dealer misrepresentation and false advertising conceal important information about a car, add-ons, overcharging, and undervaluing are auto dealer fraud types that usually occur at the time of sale or after you have already signed the purchase contract. 

Hidden and Unnecessary Add-Ons & Fees

Car dealers typically disclose add-ons through the “supplemental sticker” or “addendum” placed on the car window next to the manufacturer’s sticker. The supplemental sticker looks official. It is designed to discourage potential buyers from disputing add-ons, but nothing on it needs to come with the car.

Add-ons help a dealer boost its profits, but they may not be necessary or even wanted. One common car dealer fraud is to conceal pricey add-ons during a sale, only to have them pop up when a buyer signs an agreement to purchase a car. There are many add-ons that are either not necessary, are much cheaper to get outside the dealership, or do nothing except benefit the dealer, and these include:

  • Rust protection 
  • Nitrogen-filled tires 
  • Paint protection 
  • VIN etching

What to Do If You Face Hidden and Unnecessary Add-Ons & Fees

If you see an add-on, you do not understand, ask for clarification. Be wary if a dealer insists that a particular add-on is “mandatory.” The only mandatory changes that you have to pay when buying a used vehicle are taxes, title, registration fees, and the manufacturer’s destination charge, all of which should be factored into the car’s price.

Keep in mind that warranties and insurance packages are “mandatory” add-ons that dealers will sometimes sneak in at the last minute during the signing process. You are not obligated to purchase a warranty or an insurance package. This is true, regardless of what a dealer says.

Overcharging and Undervaluing Trade-Ins

Overcharging for used cars and undervaluing trade-ins are among the worst forms of car sale fraud because consumers have limited recourse once a sale is final. Legally, car dealers cannot sell a car for more than its advertised price. However, they can charge as much as they like for any other unadvertised vehicle.

What to Do If You Believe a Car Dealer Is Overcharging or Undervaluing Trade-Ins

Be persistent and ask to see an advertised car at the advertised price. If a dealer tells you the car is no longer available, you should walk away. Otherwise, the dealer may try to pressure you to buy a more expensive vehicle.

Buyers looking to trade in their car should be especially careful, as undervaluing trade-ins is a regrettably common occurrence. Do not accept the first offer you receive for your trade-in, and spend some time getting estimates from different dealerships. Check the value of your vehicle on Kelley Blue Book and Edmunds before you accept an offer on it.

The reason that buyers must be diligent with paying too much for a used car or receiving too little for a trade-in is that, once a sale is final, there is very little that they can do. Simply paying too much or accepting too little is not for your car by itself a basis for a claim, and the rule of thumb is caveat emptor, or “buyer beware.” Generally, you will not have a claim against a dealer for overpaying or underpaying for a car unless they engaged in another fraudulent practice during the sale, such as false advertising or misrepresentation.

What to Do If You Have Fallen Victim to Auto Dealer Fraud

As we have already seen, there are many types of car dealer fraud. If you have been the victim of one or more of them, now is the time to take action and get compensation. Here are some of the things that you can do to respond to car dealer fraud or prevent it from happening in the first place. 

Learn as Much as You Can About a Car Dealer

If you are planning to shop for a used car, conduct research into auto dealers. You can contact a dealer directly, share any concerns or questions with them, and get insights into how it treats customers. On top of this, you can look online to find customer reviews and testimonials to see what past clients are saying about the dealer. 

Not all car dealers are created equal, but the cream of the crop are easy to find. If you see that customers frequently rave about an auto dealer, you may want to explore its car inventory. When you do, you may enjoy a pleasant car shopping experience and be able to purchase a car that meets your expectations. 

File a Claim Against a Car Dealer

The first step in filing a claim against a car dealer for fraud is to obtain Form K-35 Consumer Complaint Form from your state’s consumer protection office or Department of Motor Vehicles (DMV). Print and fill out two copies of the form. Then, file one copy with your state’s DMV Consumer Complaint Center and the other with the dealer.

When you submit the aforementioned forms, include copies of all the paperwork involved in the purchase of your car and your contact information. While you are waiting for your claim to be processed, you should also file a complaint against the dealer with the BBB. This may help other consumers avoid the same issues that you are currently experiencing with the dealer. 

Gather Evidence

Evidence can make or break your auto fraud case. If you have paid for car repairs, keep track of your receipts. You may be able to use your receipts to prove that your car was defective when you bought it. 

Maintain a record of any communications you have with an auto dealer, too. Doing so can show that you are doing everything you can to address your car problems. It can also highlight how a dealer may be unwilling to assist you, even though they are forcing you to deal with these issues.  

Contact an Auto Fraud Lawyer

If you have been a victim of car sale fraud, it is important to file a claim. On the other hand, you may need legal representation to get the financial compensation you deserve. Proving fraud can be challenging, which is why you should obtain as much documentation as possible and contact an experienced auto fraud lawyer.

The ideal car fraud lawyer goes above and beyond the call of duty for their clients. This attorney will take as much time as needed to learn about your case and work diligently to help you get the best possible result. Plus, the lawyer can help you secure a settlement as quickly as possible.  

Get Started with Your Car Fraud Claim

The Robinson Lemon Law Group LLC can help you win or settle your auto fraud claim. Please contact us today to request a free case evaluation.

About The Author

Scroll to Top