Types of Auto Dealer Fraud
Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016
Auto dealer fraud can occur at almost any stage of the vehicle purchase process, from advertising to signing on the dotted line. Here are some common situations that can give rise to auto dealer fraud:
- Improperly inflating a vehicle's invoice price - The "invoice" is the amount that the auto dealer is charged for the vehicle, by the vehicle manufacturer. Examples of improper inflation of the invoice price include making additions to the invoice figure, when those charges were originally included in the invoice price (i.e. "destination" charges).
- "Bait and Switch" - A form of false or deceptive advertising, in which a car dealer lures customers 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).
More: Car Ads - Reading Between the Lines
- "Add-On" Concealment - Concealing the inclusion of certain optional "add-ons" during the negotiation process, or the costs of those add-ons, but including those add-ons in the final vehicle price. ("add-ons" include warranties and prepaid service/maintenance programs).
- Vehicle Trade-Ins - Undervaluing and underpaying for a car buyer's trade-in vehicle.
- "New" Dealer Returns - Selling as "new" a vehicle that was actually returned to the dealer because of a defect or persistent mechanical problem (see "Lemon Laws"), or was returned shortly after purchase for some other reason.
- Salvaged and Flood-Damaged Vehicles - In used car sales, failing to disclose that a vehicle has been designated "salvaged" after a car accident, or has been flood-damaged.
- Odometer Rollback - In used car sales, odometer "rollbacks" are intended to conceal a vehicle's actual mileage.
(Note: Auto dealer fraud cases differ from Lemon Law cases. In auto dealer fraud cases, improper tactics used by the car dealer during the vehicle sale process are the focus. Lemon law cases arise from problems or defects with the vehicle itself.)
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