Dealer Fraud and Your Certified Pre-Owned Vehicle

Car dealerships have bad reputations for a reason. It is highly likely that you or someone you know has felt taken advantage of or cheated while purchasing either a new or used vehicle. Our attorneys have the experience needed to determine whether what the dealership did is illegal, specifically with regard to Certified Pre-Owned ("CPO") vehicles.

There are many types of car dealer fraud. A dealer may misrepresent the actual price of a car in advertising. A dealer may sell a car that was a prior rental without informing the buyer. Or, even more dangerous, the dealer may sell a car that has significant unrepaired but hidden pre-sale damage while not informing the buyer. Vehicles like this may be unsafe to drive. You may be particularly surprised to learn that your certified pre-owned (or CPO) vehicle was not as thoroughly checked as the dealer led you to believe. Often, the dealer will spend only a minimal amount of time conducting an inspection of its CPO vehicles, never even bothering to check whether there are signs of accident damage. This is done to boost the dealer's profits at your expense. The fact that the car is certified with false or misleading information may be helpful in getting your money back. Also, if the car came with a warranty it may help in getting a refund if it has significant mechanical problems.

The car may also have significant defects in the engine, transmission or suspension which the dealer hides from the customer. A common dealer trick is to erase the error codes from the on board computer or ECM. The codes will come back within a few days of driving the vehicle. The vehicle may have improperly installed airbags, which is a significant safety concern. A newer car may have been sold before, but now is being sold as new. the dealer may misrepresent your credit standing in order to get financing on the car.

The bottom line is that you need to be very careful when buying a used car. You should always check the car history reports such as Carfax prior to signing a contract for a used car. But, be aware that CarFax may not be complete. The dealer is mandated to let you have an independent mechanic inspect the car before buying - you should always do this. We realize that very few buyers insist on getting the car inspected but there are many buyers out there stuck with a problematic car that wished they had gotten it inspected. If the dealer refuses to let you get an inspection, just walk away. Remember, cars are fungible.

You may think that if you buy an extended warranty for the car, you don’t have to worry about what condition it is in. This is not true. The extended warranty company may not cover repairs on existing defects from the time of purchase. If you are considering buying an extended warranty, you should research the warranty company to make sure it has a good reputation. You also should look carefully at the terms of the warranty. Read the fine print. Sometimes the dealer doesn’t provide detailed terms for an extended warranty. That is an indication that something is wrong. Buyers often pay too much for extended warranties. If you insist on buying one, negotiate a lower price than the dealer originally offers.

Buyers who have poor credit ratings often pay too much for cars out of desperation to get transportation. If you can arrange financing for a vehicle ahead of time from your own bank or credit union instead of with the dealer, you may get better terms, including a lower interest rate. However, there are some dealers that simply will not let you use outside financing. This is a red flag that the dealer is attempting to take advantage of you by offering you the highest interest rate possible. You may have to look carefully to find a dealer that will sell you a car for a fair price. You can get an estimate of a car’s value online at Kelly Blue Book or Edmunds.

Always be practical with respect to the monthly payments you will have to make for a car with the idea of paying the car off as fast as possible. If you are short on money one month you could get your car repossessed. Look at the sticker price and compare it to the actual price you will pay after financing - this is called the "out-the-door" cost. These figures should be in the box at the top of the contract. Based on a promise of financing, some people pay $15,000 for a used car with significant mileage that is really worth $8,000. They would have been better off buying a more economical new car for $15,000.

Treat buying a used car as a serious process and look carefully at all of the details of the deal. Don’t be swept up with the dealer’s positive spin on the deal. He is there to make a profit and you are there to look out for your own interests. The Edmunds website has excellent articles relative to buying new or used cars at edmunds.com

If you find that you bought a car and there was fraud committed by the dealer, seek legal advice. If you purchased a CPO vehicle and suspect dealer fraud, give us a call. Our firm does not charge for a consultation and when we accept a case, we are paid pursuant to fee shifting statutes, meaning that we must get our fees from the defendants in the case.

For further information regarding Auto Dealer Fraud, visit our "Frequently Asked Questions" page.