What are some common types of auto dealer fraud?

Have you ever gone to a car dealership and felt that something was just a little bit… off? Perhaps it was something that you couldn’t quite put your finger on—the salesperson seemed dishonest, was overly aggressive or even overly friendly. Whatever it was, your instinct may have been right: Some auto dealers have been known to commit fraud.

While rare, instances of fraud do happen. Fraudulent auto dealers take advantage of their customers’ trust to make unfair deals. There are several points during the transaction that fraud can occur—from the first time you see the car to the moment you sign the contract. The next time you head to a car dealership, you should know a few of the common ways that auto dealers commit fraud.

Deceptive advertising

Some car dealerships use deceptive forms of advertising to lure potential customers. An advertisement will feature a certain vehicle, but when a customer goes to the dealership to purchase it, a salesperson will aggressively try to sell them a different car. This is commonly known as a bait and switch.

Undervaluing vehicle trade-ins

Many dealerships allow customers to trade in their old vehicles in exchange for cash. What some dealerships won’t tell you is that they sometimes deliberately undervalue the car. Then, they will offer the customer less money than what the car is really worth.

Rolling back the odometer

The odometer is the part of a vehicle that displays the accumulated mileage. Odometers are supposed to give an accurate reading of how many miles a car has driven. Some used car dealers have attempted to physically roll back odometers to make it seem as if their vehicles have less mileage than they actually do.

Failing to disclose damage

Dealerships are required to disclose to customers if a car has been salvaged after an accident or damaged in a flood. Fraudulent dealers will sometimes try to sell these vehicles without disclosing the damage to potential buyers. This is information that customers are entitled to know before purchasing a vehicle.

Labeling defective cars as new

Sometimes, a car will have persistent defects or mechanical problems and must be sent back to the dealer. Other times, a customer will return a car shortly after purchasing it. What some auto dealers do is turn around and try to sell these cars as new, rather than accurately labeling them as defective or used.

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