Auto Dealer Fraud FAQ
Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016
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Q: What is "auto dealer fraud"?
A: "Auto dealer fraud" is a term that describes deceptive and unlawful practices used by automobile dealers, at almost any stage of the vehicle purchase process -- from advertising, to negotiation of vehicle pricing and financing terms. Examples of auto dealer fraud include "bait and switch" advertising practices, deceptive inflation of vehicle prices, and failure to disclose information about a vehicle.
Q: How does a "bait and switch" occur?
A: "Bait and switch" sales tactics are a form of false or deceptive advertising, in which a car dealer lures potential buyers to the dealership by advertising one vehicle at a certain price, then tells the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle (or the advertised vehicle at a price higher than the advertised price).
Q: What kinds of things must used car dealers disclose about a used vehicle that is being offered for sale?
A: In most states, car dealers must disclose whether a used vehicle has incurred significant damage in an accident, has been designated "salvaged", or has been flood-damaged.
Q: What is a mileage "rollback"?
A: A form of auto dealer fraud, a "mileage rollback" or "odometer rollback" occurs when the odometer of a used vehicle (which indicates the total miles the vehicle has been driven) is altered (or "rolled back") to display a number that is lower than the vehicle's actual mileage.
Q: How do auto dealer fraud cases differ from Lemon Law cases?
A: Although both involve motor vehicles, auto dealer fraud cases are very different from Lemon Law cases. In auto dealer fraud cases, improper tactics used by a car dealer during the vehicle sale process are the focus, while lemon law cases arise from problems or defects with the vehicle itself.
Q: Should I contact the dealer if I feel that a car salesman committed fraud when I bought a car?
A: You may be required to do so. In many states, you (or your attorney) must contact the auto dealer and give them an opportunity to correct the problem to your satisfaction, before taking any legal action for possible auto dealer fraud. This contact should be in writing, and should clearly illustrate both the problem (i.e. the dealer's failure to disclose certain financing charges), and what steps you would like the dealer to take to resolve the problem (i.e. a partial refund of the vehicle purchase price).
Q: Can I file a lawsuit for auto dealer fraud?
A: In most cases, yes. If you recently purchased a vehicle and you suspect that the dealer may have committed fraud in the sales process, you may want to speak with an experienced Auto Dealer Fraud Attorney. An Auto Dealer Fraud attorney will evaluate all aspects of your case and explain all options available to you -- including filing a lawsuit for your damages -- and will work with you to ensure the best possible outcome for your case. Remember that in some states, you are required to contact the dealer and give them an opportunity to correct the problem before you take any legal action.
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