What is Auto Fraud?
When a seller misrepresents to the consumer or does not disclose to the consumer the true nature or history of the vehicle or misleads the consumer as to financing terms, auto fraud has occurred.
An astonishing percentage of car sales involve fraud, deception, or unfair conduct. Auto fraud is so prevalent because car purchases are so complex. The sale involves compliance with state titling and registration laws, and often involves trade-ins, financing, leasing, physical damage and liability insurance, credit insurance, service contracts, options, and other fees. This complexity provides ample opportunities for confusion and deception. Below are several commons types of auto scams used by dealers, other car sellers, banks, lenders, and insurance companies.
Prior Flood Vehicles
Sale of flood or hurricane damaged cars without disclosure of that adverse history
Sale of stolen cars and cars with similar title problems (that is, nondisclosure that a car has once been stolen).
prior wrecked vehicles
Sale of wrecked cars without disclosure of that adverse history
misrepresentation of prior use
Misrepresentation of the number of a car’s prior owners or the vehicle’s prior use, such as use as a rental or leased car, a taxicab or a police car, or a history as a repossessed car. Misrepresentation of demonstrators, program cars, and other used cars as new when in fact they are not.
Yo-yo sales in which the consumer believes ownership has been transferred, but the dealer considers itself still to have the right to back out of the deal.
A vehicle is advertised at one price, but the price is changed once the consumer arrives at the dealership. Or a vehicle is advertised as having certain features and specifications, but the dealer only has a basic model.
mechanical problems and lemon laundering
Sale of cars with a history of mechanical problems without disclosure of that history, including cars returned to the manufacturer because of serious mechanical problems (lemon laundering)
Misdisclosure of the accuracy of an odometer, and misrepresentation of a vehicle’s mileage.
Gray Market vehicles
Sale of “gray market” vehicles, that is, vehicles that were not manufactured for sale in the United States, without disclosure of that fact.
Sale of used cars without disclosing that their airbags are missing.