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Myriad, recurring auto dealer scams target of federal regulators

On Behalf of | Jun 1, 2015 | Consumer Protection

Remember Jerry Lundegaard?

If you haven’t seen the movie Fargo, the name means nothing to you, of course. If you have, you’ll likely never forget the character, for a host of reasons.

One of those relates to Lundegaard’s behavior and arm-bending strategies as a car salesman at a large dealership. In one notable Fargo scene, Lundegaard goes back and forth with a clearly incensed would-be buyer regarding vehicle undercoating, which the consumer neither wanted nor requested.

As noted in a media article/report chronicling various auto fraud strategies employed at dealerships to fleece consumers, undercoating is a so-called “add-on product” that a salesperson pushes to increase the company’s bottom line. Increased profits are also derived from myriad other unethical and flatly illegal dealer machinations, which collectively draw close scrutiny from the Federal Trade Commission and other consumer-protection groups.

In fact, the FTC recently announced a nationwide crackdown on auto dealer fraud that specifically targets a set of enumerated scam tactics employed by unscrupulous actors. Among other things, Operation Ruse Control cites car title irregularities, contractual fine print that wipes out promised savings for consumers — classic bait-and-switch strategies — and loan fraud that falsely inflate buyers’ incomes so that they leave a dealership with an automobile that they cannot really afford.

Auto dealer fraud is unquestionably a large-scale and recurring problem in every state across the country, including Pennsylvania. That reality is strongly implied in a comment from a ranking federal regulator who, in addressing the matter, felt compelled to state that, “That’s not to say there aren’t many, many honest dealers” in the automotive industry.

The reverse inference that is immediately derived from those words clearly puts would-be buyers on notice that fraud is a sizable matter of concern when it comes to auto transactions and that they need to enter into vehicle-related negotiations with reasoned skepticism and eyes wide open.

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