Auto Fraud Frequently Asked Questions

Auto dealer fraud occurs when a retailer seller misrepresents or fails to disclose material facts regarding a new or used vehicle, in violation of California consumer protection statutes. There are many categories of auto dealer fraud: sale of wrecked vehicles, sale of previously repurchased “lemon” vehicles, odometer fraud and various financial frauds that occur in the advertising or at the time of sale or lease of the vehicle. The following are some Frequently Asked Questions our California lemon lawyers receive during our daily interaction with vehicle consumers.

If you have additional questions regarding auto dealer fraud or California lemon law, please contact our law firm now for a free consultation.

There are numerous schemes automobile dealerships use to increase profits and defraud consumers during the purchase or lease process. These schemes include: misrepresenting discounts in advertising and not disclosing important limitations; altering the terms of the contract and forging signatures; inflating quotes of monthly payments and then selling add-on products (service contracts, paint sealant, alarms, etc.) as if they were part of the deal; and adding amounts owed on trade-in vehicles to a purchase or lease contract without disclosure to the consumer. These schemes are sometimes complex, and most consumers never realize they’ve been cheated.

Odometer fraud occurs when a seller falsely represents the actual mileage of a vehicle. Common examples of odometer fraud include situations where someone has tampered with the odometer and rolled it back, someone has replaced the odometer and failed to provide the required notice on the vehicle, or where the odometer has rolled through all the digits and started over.

Consumers will typically begin to notice problems in the appearance or performance of their vehicle that may be tell-tale signs of a previous accident. Common examples of appearance items include: over-spray paint on portions of the vehicle, paint fading unevenly, paint peeling, panels that don’t line up or fit correctly, and doors or trunk lids that don’t close properly. Common performance-related signs include accelerated or uneven tire wear and front-end pulling. The best way to tell if your car was damaged is to have it inspected by a body shop. Signs of damage are usually fairly easy to detect, although a frame check may be required if structural damage is suspected. We routinely have clients’ vehicles inspected by a nearby, reputable shop. You should be aware that Car Fax vehicle history reports often fail to reveal prior accidents or damage – and that dealers sometimes use these (often incomplete) reports to “prove” that a vehicle hasn’t been damaged.

Few things are more aggravating in the purchase of a vehicle than to find out that it has sustained prior material accident damage. It is illegal to sell a new vehicle with any unrepaired damage, any structural damage or even if repairs were made costing more than 3% of the vehicle’s value. Vehicles sold as Certified Pre-Owned vehicles, meanwhile, must live up to the dealership’s advertised certification standards. It is always illegal to sell an unsafe vehicle, and if you asked specific questions about a vehicle, new or used, the dealer is obligated to provide truthful responses (to the best of his knowledge). So, for example, if you ask a dealer whether a vehicle has been in a prior accident and the dealer, that misrepresentation can be auto fraud. Likewise, if a dealership fails to disclose material damage, even if previously “repaired,” this can also be fraud.