types of auto dealer fraud

Unmasking Auto Dealer Fraud: A Comprehensive Guide to Understanding and Avoiding Deceptive Practices


In the world of automotive commerce, unscrupulous practices known as auto dealer fraud can occur at virtually any juncture during your vehicle purchase journey. These deceptive tactics span from the advertising phase right through to the moment you append your signature to the final agreement. This article dissects the various forms of auto dealer fraud, educating consumers on what to watch out for, and how to protect themselves.

Dissecting Auto Dealer Fraud: What Does It Look Like?

Auto dealer fraud is a chameleon, capable of taking on numerous guises. Here are some common scenarios in which auto dealer fraud can rear its ugly head:

Misrepresentation of Vehicle’s Invoice Price

In the automotive industry, the “invoice” represents the price the dealer pays the vehicle manufacturer for the car. Fraud can occur when dealers dishonestly inflate this figure by adding extra costs that were already incorporated into the original invoice price. One common instance is the erroneous addition of “destination” charges.

The “Bait and Switch” Tactic

A notorious method of false or deceptive advertising, the “bait and switch” tactic is a ploy designed to entice potential customers. Dealers lure customers to their showroom by advertising one vehicle at an attractive price. Upon arrival, customers discover that the advertised vehicle is purportedly no longer available. Using high-pressure sales strategies, the dealer then attempts to sell a different, pricier vehicle or the initially advertised vehicle at a marked-up price.

Concealment of “Add-Ons”

Auto dealer fraud can also occur when dealers hide the addition of optional “add-ons” during the negotiation stage. These could be features like warranties or prepaid service/maintenance programs. The cost of these add-ons then mysteriously finds its way into the final vehicle price, unbeknownst to the buyer.

See also  Automobile Warranties and Other Buyer Protections

Underappreciation of Vehicle Trade-Ins

Another fraudulent practice is the undervaluation of a customer’s trade-in vehicle. This unethical tactic sees the dealer undervaluing and consequently underpaying for the customer’s trade-in vehicle, unfairly swaying the deal in the dealer’s favor.

Deceptive “New” Dealer Returns

A dealer may fraudulently market a vehicle returned to the dealership due to a defect or persistent mechanical issue as “new.” This can also apply to vehicles that were returned shortly after purchase for various reasons, exploiting the customer’s trust.

Concealment of Salvaged and Flood-Damaged Vehicles

In used car sales, some dealers may neglect to disclose crucial information about a vehicle’s past. They might fail to reveal that a vehicle has been designated as “salvaged” following an accident or has sustained flood damage, taking advantage of unsuspecting buyers.

Odometer Rollback Fraud

Another deceptive practice in used car sales is the infamous odometer “rollback.” This trick is intended to hide a vehicle’s actual mileage, presenting it as a less used, and therefore more attractive, purchase.

Conclusion: Auto Dealer Fraud vs Lemon Law Cases

It’s essential to distinguish auto dealer fraud cases from Lemon Law cases. The former focuses on the inappropriate strategies employed by car dealers during the vehicle sales process, while the latter arises from issues or defects with the vehicle itself.

Understanding the distinction and being aware of the various forms of auto dealer fraud is the first step in ensuring a fair and transparent car buying experience.

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