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AUTO DEALER FRAUD

”Auto dealer fraud” describes deceptive and unlawful practices that automobile dealers use during advertising, pricing negotiation, sales and the financing of a vehicle; and can occur during any stage of the vehicle purchasing process. Unfortunately, most consumers are not aware that they may be victims of auto dealer fraud until it’s too late because they are simply unaware of their rights.

Hovanes Margarian is an experienced Los Angeles fraud attorney in the state of California, who specializes in car dealer fraud. Due to his in-depth knowledge and experience, Mr. Margarian knows exactly what is necessary for you to win your case. We encourage you to look over the different types of auto dealer fraud, and contact us if you believe you are a victim.

Here are some common types of auto dealer fraud:

Non-disclosure of previous taxi, limo, and rental

Former taxicabs, limousines, rental vehicles, and publicly owned vehicles usually have very high mileage and a lot of wear-and-tear, so they may be valued 10-60% less compared to similar vehicles not used for commercial purposes. It can also significantly reduce the resale value of the vehicle. If the dealer doesn’t disclose whether the vehicle has been used for such purposes, it is considered to be an auto fraud.

Non-disclosure of frame damage

Many used cars have pre-existing conditions, such as frame damage or body damage. In this case, the selling party must give the buyer a written disclosure notice of those conditions. If the vehicle has frame damage, it is usually valued 30-70% less than similar vehicles that have no frame damage. Note that frame damage can pose serious safety threats.

Non-disclosure of previous accident

Used car dealership scams include cases like used vehicles being involved in an accident. The dealership must give a disclosure prior to selling a vehicle if it has been involved in an accident. In addition, the selling party must also provide a truthful response to questions and may not make any statements without definite knowledge of their validity.

Non-disclosure of a salvage title

In some cases an accident may be so severe that the vehicle was considered a “total loss” (paying off the consumer and taking the title). A “total loss” is when the cost of a proper repair exceeds 70% of the vehicle’s market price. These vehicles should be repaired at licensed repair facilities and should be inspected for safety. If the vehicle passes through the safety inspection, it must be sold with full disclosure of its salvage title status.

Non-disclosure of an accurate condition of vehicle

Some used cars often have pre-existing conditions fully known to the seller. However, the seller must properly disclose these conditions to the buyer at the time of sale. Since some pre-existing conditions may cause serious safety threats and financial losses, it is important for the consumer to know all the details prior to making the purchase.

Non-disclosure of a “lemon law” buy-back

If the vehicle has previously been repurchased by a manufacturer as a “lemon law” buy-back, it must be sold to the sell with a full disclosure.

Mileage fraud or Odometer Rollback

Odometer fraud is a common car dealer fraud practice. Car dealers that tamper with the odometer intend to conceal a used vehicle’s mileage, which in turn, can significantly reduce the value of the car.

Improper Certification of Used Cars

When it comes to selling a used car, the certification is a major point. The value of a vehicle significantly increases if it is certified. Improper certification is a form of auto dealer fraud, done when the dealer advertises the vehicle as certified but in fact it is not.

Advertisement of special equipment or accessories

Sometimes vehicles are advertised having special equipment or accessories which are included in the purchase price. There may be cases when the described special equipment or accessories are not included or are not operative.

”Bait and Switch” advertising practices

This is a form of fake or unreliable advertising, where a car dealer lures customers to the dealership by advertising a vehicle at a certain price, then tells the customer the vehicle is no longer available in an attempt to sell a different, more expensive vehicle.

Warranty Fraud

Usually, a warranty is sold with used vehicles at the time of purchase. The dealer must supply it to the purchaser and give disclosure of what it covers. Warranty fraud in this case, is when a contractual agreement is dishonored or a product is not as should be.

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