Car Dealer Scams and Tricks

AUTO SCAMS AND CONSUMER RIGHTS:

AUTO DEALER FRAUD

Scam 1 – Vehicle History

The most prevalent scam in the automobile industry is selling a vehicle with pre-existing damage. There are numerous reasons to do this by a selling dealership; however, the most basic reason would be for profit. With this pre-existing damage, a dealer could acquire a vehicle for less, due to the damage, and sell the vehicle for more without disclosing the appropriate amount of the prior damage, prior history or any pertinent information. This claim would be actionable under the New Jersey Consumer Fraud Act, the Magnuson-Moss Warranty Act and other various claims.

Scam 2 – Selling Damaged Cars/Frame Damage/Accident Damage/Inaccurate History

Another scam, similar to the non-disclosure of prior damage, is non-disclosure of relevant information. As an example, if a prior vehicle was used as a taxi, police car, a rental or some other use which might be relevant from the consumer’s perspective, its history would be required to be disclosed under the New Jersey Consumer Fraud Act under most circumstances. Thus, dealers are able to acquire vehicles through auction or through trade which might satisfy these criteria. Since the dealership would be able to obtain a vehicle like this at a lower price not disclosed to the plaintiff, they would be able to reap additional profit as a result of this conduct. The dealer also has the expertise to discover damage to any car and other conditions that would make a difference in the consumer's purchasing decision. The law is very clear on material commissions. If the disclosure is intentional because the dealer knows it would make a difference in the decision by the consumer the disclosure must be made.

Scam 3 – Price Packing

A common dealer practice is known as price packing. Under this practice, a dealership will sell the plaintiff various products without their knowledge or consent. The basic premise is that it is built-in or packed into the price. As an example, if the dealer quotes a price at $500 per month as if everything is included but has not advised the plaintiff that what is included is a warranty at $50 per month, a gap product at $50 per month, a replacement product at $50 per month, or some other product which is included in these monthly payments, it needs to be disclosed. There are various reasons these products need to be disclosed: because they could be canceled, require disclosure to insurance companies, or, as a common matter, permit the plaintiff to decline such purchase of a product. It is common that the dealership not place in the retail installment sales contract a specific amount paid to a third party to hide it from the potential purchaser. This is very common and requires extreme scrutiny by a customer or consumer attempting to purchase a vehicle.

Scam 4 – Bait and Switch and advertising

Dealers will place an advertisement in a newspaper or a magazine and not make the vehicle available, or place the ad with the idea of steering the customer towards a different vehicle where the profit is additional. Or the dealership might not remove the vehicle from the advertisement after it is sold. Under these circumstances, it would be deemed a bait and switch, which would be actionable under New Jersey law under most circumstances. Be careful and document your car buying experience.

There is a similarity between various dealer scams. Generally there is is a failure to disclose a pertinent fact as to the transaction: history of the vehicle, prior damage, interest rate, mileage, odometer settings, product prices, product details, used vehicle certification details, selling dangerous vehicles with known defects, and recalls, among other issues.

For general purposes only, it might be easier to categorize these types of scams for explanations. But be forewarned: the types are various and you need to be careful when purchasing a car.

It is required that yo protect yourself and you understand your consumer rights when buying a car form a dealer.