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How To Sue a Car Dealer for Misrepresentation

Car dealer showing clipboard and paperwork to a customer

You can sue a car dealership for lying to you in some situations.

Let's say you've found a great used vehicle — a sharp sports coupe with a shiny coat of paint and the extra power of a V6 engine. The salesperson told you the car was in mint condition with low mileage and had never been in an accident.

You like the car's condition and are thrilled at the price. You proudly drive it off the lot.

You learn soon after you buy it that the car has been in a major collision with significant body damage. The dealer made cosmetic fixes to make the vehicle look new and rolled back the odometer. This dealer was not truthful with you.

This is illegal and known as fraud or misrepresentation. Consumer protection laws protect you, and you can file a lawsuit with help from an auto fraud attorney. This doesn't apply just to used cars. You can sue for issues with a new car as well.

Below is key information about how to sue a car dealer for misrepresentation.

Federal and State Laws

Several federal and state statutes in place prohibit car dealer fraud and misrepresentation. You also have certain specific rights if you buy a used car.

While "lemon laws" cover selling defective vehicles, they only apply to new vehicles in some states. Only some states' lemon laws cover used vehicle purchases as well.

Car dealer fraud laws protect consumers looking to buy a car, truck, van, or motorcycle. Some of these laws include regulations put into place by:

Types of Auto Dealer Misrepresentation Claims

There are two basic types of auto dealer misrepresentation: blatant misrepresentation and the failure to disclose material facts.

They most often take the following forms:

  • "Bait and switch" advertising practices
  • Odometer tampering
  • Saying a vehicle comes with certain options or features when it doesn't
  • The dealer won't honor the warranty or claims your exact needs are outside of the coverage
  • Deceptive inflation of vehicle prices if you paid more than the advertised price
  • Failure to disclose information about the vehicle's history (such as past accidents, defects, insurance losses, or frame damage)
  • Splitting the down payment into two or more checks
  • Claiming your financing fell through and you need to bring the car back ("yo-yo financing")

Fraud Claims Against a Car Dealership

If your dealership outright lies to you, you may be able to sue for common law fraud.

Although state law varies, you generally need to establish the following:

  • The dealer made a false representation of a past or present material fact
  • The dealer knew their representation was false or was ignorant of its truth
  • The dealer intended to induce you to act
  • You act in reliance on the representation (meaning you make a decision or take action based on the information the seller has given you)
  • You suffer foreseeable damages or financial loss caused by the false representation

Note that there is a difference between fraud and misrepresentation. Fraud requires the dealer to know at the time they make a representation that it is false. Misrepresentation does not need that knowledge.

Failure to Disclose Claims Against a Car Dealership

Sometimes, you discover a hidden problem (like a defect) after buying your car. Generally, it is harder to make a fraud claim based on an omission of fact. These claims are often called fraudulent misrepresentation or nondisclosure by omission.

In most states, you have to prove the following:

  • The dealer owes a duty to disclose material information about the car
  • The dealer knows the information
  • The dealer knows that you would rely on the information if you knew it in making your purchasing decision
  • The dealer fails to disclose that information

The problem in this context is showing the dealership owed a duty to disclose. Generally, one party to a transaction does not owe a duty to disclose to the other party. State law varies (and there are exceptions), so it helps to discuss your possible claim with an experienced attorney in your area.

Filing a Lawsuit Against a Car Dealership

A victim of vehicle consumer fraud will want to collect damages for their financial loss. If you believe you have been the victim of auto fraud by way of misrepresentation, you may be able to file a lawsuit in small claims court.

Some states require car buyers to contact the dealer first to allow them to correct the matter or to speak with a state consumer protection agency.

Some possible remedies that you may collect on include:

  • Surrendering the vehicle and getting your money back (including a full refund of all monthly payments made)
  • Canceling any outstanding loan balances or obligations
  • Having court costs and attorney fees reimbursed when you take legal action
  • Being awarded punitive damages for particularly egregious conduct

Filing a Complaint

Besides taking legal action and filing a lawsuit, you also have the option to file a formal complaint. Before you do this, collect all relevant information and evidence that supports your claim of fraud or misrepresentation. This can include the sales contract, advertising materials, emails, and vehicle photos showing misrepresented issues.

You can file complaints and report fraud to federal and state consumer protection agencies. Report your issue to The Federal Trade Commission (FTC), your state's attorney general's office, and department of commerce.

You can also complain to the Better Business Bureau (BBB). This tactic may spur the dealership into action and help mediate the situation.

These agencies act as mediators between consumers and businesses to help resolve disputes. Filing a complaint with them can be a step toward a resolution, but it is not an equal substitute for pursuing legal action. But you can file a complaint instead of a lawsuit without an attorney and for little to no cost.

Filing complaints with these agencies also alerts authorities to potentially fraudulent or deceptive car sales practices in your area.

Dealer Penalties for Misrepresentation and Auto Fraud

Penalties for car dealers guilty of misrepresentation or auto fraud vary by jurisdiction. Typically, civil court handles these cases, but a prosecutor can pursue criminal charges depending on the severity of the situation.

Dealers engaged in fraud or misrepresentation are also subject to regulatory actions. These include fines, license revocation, or other business sanctions.

Pros and Cons of Filing a Lawsuit

There are several remedies (including monetary) you may be able to recover in a lawsuit.

There are at least three other advantages to suing:

  • You may deter an unethical dealer from lying to someone else in the future
  • You may be able to negotiate a settlement on favorable terms
  • You may get a great deal of personal satisfaction from taking the dealer to court

There are also downsides to filing a claim:

  • You may lose and be out money for court costs and expenses
  • Although some lawyers may take your case on a contingency fee basis, you might be out attorney fees (be sure to clarify this with your lawyer before you decide to sue)
  • Lawsuits can be stressful and time-consuming

You Have a Limited Amount of Time to Sue

The time limit for suing a car dealership depends on the nature of the claim and your state. If you're considering bringing a claim, remember this so the statute of limitations doesn't expire.

How To Sue a Car Dealer: Related Resources

Learn more about your options and how to take action with this information:

Learn More About Car Dealer Misrepresentation

Car dealer lies and scams are on the rise, and it is up to you to protect your rights.

To learn more about car fraud laws in your state and how to file a lawsuit if you believe you've been the victim of this practice, speak with an experienced auto dealer fraud lawyer for legal advice.

An experienced lawyer can review your case, tell you how to report the alleged fraud, and how to win compensation for your losses.

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Next Steps

Contact a qualified consumer attorney to assist in your lemon law or dealer fraud matter.

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