How to Sue a Car Dealer for Misrepresentation

Car dealer showing clipboard and paperwork to a customer

By FindLaw Staff | Legally reviewed by Steven J. Ellison, Esq. | Last updated November 15, 2021

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

Let's say you've found the best “newish" used car out there -- a spiffy little sports coupe with a shiny coat of paint and the extra power of a V6 engine. You proudly drive off the lot, not a care in the world other than where your next road trip will be.

The salesperson told you the car was in “mint condition," never been in an accident, and has low mileage. While this all sounds like a car enthusiast's dream, it's about to turn into a nightmare.

You learn that the car has been in a major collision with significant body damage (since made to look new) and the odometer has been rolled back. The dealer was clearly not being truthful with you.

This is illegal. It is unlawful and is known as fraud or misrepresentation. You are protected under consumer law and can choose to file a lawsuit with the help of an auto fraud attorney. This doesn't apply just to used cars. You can sue for issues with a new car as well.

Below you will find key information about how to sue a car dealer for misrepresentation about the condition of the car.

Federal and State Laws

First, let's start with a brief overview of the law. There are several federal and state statutes in place that prohibit car dealer fraud and misrepresentation. You also have certain specific rights if you buy a used car. Here is a reference.

While “lemon laws" cover the sale of defective vehicles, car dealer fraud laws are meant to protect consumers looking to purchase a car, truck, van, or motorcycle.

Some of these laws include regulations put into place by:

The Federal Trade Commission (FTC)
State consumer protection agencies such as the California Department of Consumer Affairs
General state fraud statutes

Types of Auto Dealer Misrepresentation Claims

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

They most often take the following forms:

“Bait and switch" advertising practices
Odometer tampering
Asserting that 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, or frame damage)
Splitting the down payment into two or more checks
The dealer claims the financing didn't go 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
You suffer foreseeable damages 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 require that knowledge.

Failure to Disclose Claims Against a Car Dealership

Sometimes, after purchasing your car, you discover a hidden problem, like a defect. Generally, it is harder to make out a fraud claim based upon an omission of fact. These claims are often called fraudulent nondisclosure or misrepresentation 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 that the dealership owed a duty to disclose. As a general rule, one party to a transaction does not owe a duty to disclose to the other party. State law varies, and there are exceptions, so you may want 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 loss. If you believe you have been the victim of auto fraud by way of misrepresentation, you may very well be able to file a lawsuit.

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

Some possible remedies that the victim may be entitled to collect on include:

Surrendering the vehicle and getting your money back (including a full refund of all monthly payments made toward the purchase)
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

Pros and Cons of Filing a Lawsuit

There are a number of remedies, including getting money, that you might be able to recover in a lawsuit.

There are at least three other upsides 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

As far as downsides go:

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 (so make sure to talk to your lawyer about this before you decide to sue)
Lawsuits can be stressful and time-consuming

You Have a Limited Amount of Time to Sue

The time in which you can sue a car dealership depends on the nature of the claim and the state you are in.

It varies from state to state, so if you are thinking about bringing a claim, you will want to keep this in mind so that you don't run out of time.