Auto Sales & Financing Fraud

It’s no secret that automobile dealers can be some of the shadiest businesses around.

Unlike, say, banks or credit card companies, they’re less regulated, less likely to have permanent locations, staff, and assets, and dominated by a profits-first mentality that tolerates ripping people off and lying to them,  and sometimes even encourages it.  To make matters worse, arbitration clauses are almost always upheld in auto sales contracts, so many of the worst offenses never see a jury.  But that doesn’t mean that when you’ve been screwed by a shady car dealer that you have to take it sitting down. You can fight back, but you must be proactive.

Auto fraud can take a number of forms:

• “Spot Delivery” scams

You go car shopping.  You buy a car, sign the paperwork, and drive away in your new ride.  Then a few days, or a few weeks later, you get a call from the dealership.  They say that your financing didn’t go through and you have to bring the car back.  This can be illegal.  And they can never force you to agree to a higher payment than you’d originally bargained for.  And they CANNOT KEEP YOUR DOWN PAYMENT or TRADE IN VEHICLE.

• Not Paying Your Trade-In

When a dealer takes a vehicle as a trade-in, they have a duty to pay it off promptly.  But sometimes they don’t.  Maybe they mistakenly forget to send your finance company a check, or maybe they just don’t care.  Either way, your old car gets repossessed by your old finance company, and you have a big fat repo on your credit record, and the old finance company still breathing down your neck for money.  This is illegal.

• Lying About the Vehicle’s History

You ask all the right questions – Has it ever been wrecked?  How many owners has it had?  Was it ever used as a rental or fleet vehicle?  Was it driven extensively up North where the snow salt makes cars rust out quicker?  And the dealer gives all the right answers: never wrecked, never salvaged, never rented, single owner, local ownership history.  But they turn out to be lies.  Dealers nowadays try to paper over lies by burying disclaimers in the paperwork, but if you ask the right questions and they lie to you intentionally without disclosing the full truth on the paper, that’s still fraud.

• Denying your loan application without a written explanation

The Equal Credit Opportunity Act and the Fair Credit Reporting Act require that they notify you when you’ve been denied credit, and that they tell you why.  If the dealership handles more than 150 credit applications a year (only the tiniest dealers don’t), they have to give you a written explanation of why you were denied credit.

• Falsifying your loan application

If you submit your financial info to apply for a car loan, and then later find out that the dealer had submitted different information, they’re committing bank fraud and violating the Credit Repair Organizations Act.

• Not Giving You Clear Title When You’ve Paid them in Full

Perhaps the most painful form of car dealer fraud is when you’ve bought a vehicle, made payments for years, and finally paid everything off, only to find years later that the dealer who sold you the vehicle never owned it in the first place.  Yes, this actually happens.  In Alabama, once you’ve made your last payment, you have the right to request a title certificate.  They have 15 days to give it to you.

• Selling Vehicles They Don’t Even Own

Believe it or not, this actually happens more often than you’d think.  I’ve had several clients who signed sales contracts, made down payments or trade-ins, and thought they were buying a vehicle – only to find out months later that the car they’d been sold had not even been owned by the dealer at the time of the sale.  Sometimes there is a lien on the automobile that the dealer never paid off.  Other times, the dealer just flat-out doesn’t own the vehicle, and God only knows how it got onto their lot.  But as common sense dictates, you just can’t sell a vehicle that isn’t rightfully yours to begin with.  Unfortunately, this sort of scam happens every day to unsuspecting customers.

If you or someone you know has been cheated by a car dealer, call us today at 251.272.9148.