Car Dealership Fraud Law Overview
Car dealership fraud encompasses deceptive practices by car dealerships intended to mislead consumers, resulting in financial loss or the purchase of a vehicle that is not as represented. These fraudulent actions can violate both state and federal laws designed to protect consumers.
Key Components of Car Dealership Fraud
Odometer Fraud
Definition: Tampering with a vehicle’s odometer to show fewer miles than the vehicle has actually traveled.
Example: A dealership rolls back the odometer on a used car to make it appear less used and increase its sale price.
Title Washing
Definition: Altering a vehicle’s title to hide information about past damage or salvage status.
Example: A car that was previously deemed a total loss due to flood damage is retitled to remove any indication of the damage.
Bait and Switch
Definition: Advertising a vehicle at a low price to attract customers, then claiming it is unavailable and pushing a higher-priced vehicle instead.
Example: A customer visits a dealership for a car advertised at a special price, only to be told it was just sold and shown more expensive models.
Financing Fraud
Definition: Misrepresenting financing terms or adding unauthorized charges to the financing agreement.
Example: A dealership promises a low interest rate but the final paperwork includes a much higher rate without the buyer’s knowledge.
Failure to Disclose
Definition: Not informing the buyer about significant issues with the vehicle, such as previous accidents, flood damage, or mechanical problems.
Example: A dealership sells a car without disclosing that it was previously involved in a major accident.
Federal Laws
Truth in Mileage Act (TIMA): Protects consumers from odometer fraud.
Federal Trade Commission (FTC) Regulations: Prohibits deceptive advertising and unfair practices.
State Laws
Vary by state but typically include consumer protection statutes and lemon laws that provide remedies for buyers of defective vehicles.
Example: A consumer files a complaint with the state’s attorney general’s office under the state’s consumer protection law after discovering odometer fraud.
Causes of Action
- Intentionally providing false information about the vehicle’s condition, history, or price.
- Failing to honor the terms agreed upon in the sales contract.
- Engaging in unfair or deceptive acts as defined by state or federal laws.
- Failing to uphold the promises made in the vehicle’s warranty.
Resolutions and Remedies
- Rescission of Contract: Cancelling the sales contract and returning the buyer and seller to their pre-contract positions.
- Refunds: Providing a full or partial refund to the buyer.
- Replacement: Offering a replacement vehicle that matches the original agreement.
- Repairs: Paying for necessary repairs if the vehicle was misrepresented.
- Damages: Compensating the buyer for financial losses, including punitive damages in cases of egregious conduct.
- Attorney’s Fees and Costs: Reimbursing the buyer for legal expenses incurred in pursuing the claim.
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