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AUTOMOBILE CONSUMER FRAUD
In the Washington, D.C. metropolitan area - and across the county - numerous consumers are being defrauded by unscrupulous automobile dealerships, and frequently, a consumer is a victim even before he or she walks into a dealership.
Any consumer can fall prey to the schemes of an automobile dealer. In the majority of instances, consumers will drive out of the dealership in their new car without any knowledge that they were victimized. To evaluate if you are one of the many who has suffered such fraud, it is helpful to determine whether you were tricked by one of the following common automobile fraud practices:
1. Modifying the Manufacturer Suggested Retail Price (MSRP) Sticker
It is a common scheme for automobile dealers to artificially increase the price of the vehicle by adding noncompetitive prices on items such as stereos, hitches, detailing accents, "special" tires, warranties, paint sealant, undercoating, and more. Shockingly, the added or premium products are often standard equipment for which the dealer simply charges the consumers extra.
2. Failure to Notify the Consumer of Valuable Rebates
Manufacturers commonly offer valuable rebates associated with the purchase of a new automobile. Automobile dealers, however, often refuse either to inform consumers of these rebates, or else they hide the rebate in the transaction so as to pack additional overpriced products into the deal. To add insult to injury, the sticker price shown to the consumer very often will not reveal rebate information — thus allowing the dealers to collect rebate money rightfully owed to the consumer.
3. Misuse of the Consumer's Credit Information
In what is now one of the most common ploys, automobile dealerships will instruct their sales staff to unlawfully obtain and even adjust (to a higher or lower score) a consumer's credit information. The consequence is that the consumer's credit report will provide the dealer with information about previous auto loans, credit card balances, and other financial information that make it easier for a dealer to victimize the consumer.
4. Manipulating Consumers to Purchase Unnecessary Products
In many auto fraud cases, greedy salespeople will manipulate a consumer into buying unnecessary or fraudulent warranties. Most of the costly warranties that dealerships sell are already covered under the standard factory warranty, but are hidden and not disclosed to the buyer. This results in 100% profit for the dealership and no value for the consumer.
5. Failure to Disclose Past Use of Damages on Vehicle
On far too many occasions, dealers fail to disclose to consumers all information relating to the history or prior use of an automobile, including accident history, damages, defective parts, mileage, and condition of the vehicle. As a consequence, consumers often pay dealerships hundreds and even thousands of dollars in excess of the actual value of the vehicle.
6. Failure to Reveal Financial Transactions Between Dealership and Bank
Once the customer leaves the auto dealership, the dealership and bank typically transfer financial transactions to secure the loan via email or fax to speed up the process of the sale. In doing this, dealers may withhold information from the consumer about possible loan increases or special bank specifications, potentially costing the consumer thousands of dollars.
7. Other Unfair and Deceptive Trade Practices
Possibly the most common example of automobile fraud involve cases in which dealerships make false statements about certain products, prices, offers, and more. State and federal laws forbid such dishonesty and harshly punish automobile dealers who engage in false or misleading advertisements. Unscrupulous tactics favored by automobile dealers include:
- Bait and switch advertising. It is illegal to promote a product that a company does not intend to sell or provide. Automobile dealers will use bait and switch tactics by promising to sell an item at a certain cost to a consumer, when they actually plan to sell something that is more costly
- High-pressure sales tactics to get a consumer to purchase an unwanted product or service
- Use of deceptive form contracts
- Artificial price inflation that tricks a consumer into thinking that he or she is receiving a good deal
- Use of fine print to mislead consumers
- Failure to disclose when an offer expires
- False claims of offering wholesale or factory direct products
Consumers should know that they are protected against auto fraud by federal and state laws such as the Truth in Lending Act (TILA) and state-specific Unfair and Deceptive Trade Practices Acts.
TILA was enacted to protect consumers in credit transactions. The United States Congress stated that its purpose in creating TILA was "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him ... and to protect the consumer against inaccurate and unfair credit billing ... practices."
TILA requires that creditors make specific truthful disclosures as a part of the process of extending credit to customers. These disclosures include the amount financed, an itemization of the amount financed, the total number of payments, all finance charges, the annual percentage rate, and the identity of the creditor.
Courts have mandated that, to ensure that the consumer is protected as Congress envisioned, the provisions of TILA and the regulations implementing it must be absolutely complied with and strictly enforced. As a consequence, any failure by a creditor to accurately make the required disclosures under TILA results in a violation of the Act entitling the consumer to damages that are sometimes substantial.
If you believe that you or a loved one has fallen victim to automobile fraud, or if you would like to learn more about auto fraud practices or enforcing your legal rights, please contact the Zipin Law Firm today to speak to a qualified and experienced attorney who is committed to protecting your best interests.
