As the auto dealership industry transitions from paper loan forms to electronic loan forms, buyers are being scammed by unscrupulous car dealers – sometime when they didn’t even purchase a car.
How does this happen?
Unlike a paper loan form, it’s not easy to tell when an electronic loan form (also called an e-contract) has been tampered with. Because of this, some states, such as California, don’t allow the use of auto e-contracts.
Many times the dealer won’t even show you the e-contract, he will just ask for your signature. And even if you do see it, there are many other ways for the car dealer to take advantage of you via the e-contract.
For instance, the dealer may not actually submit the e-contract, and then go back and change the purchase price after you’ve left. You could also be charged for extras you did not actually request or receive.
Maybe you never filled out an electronic loan form, but you filled out a paper form to check your available credit. If not destroyed, the information on that paper form could be used later to complete an e-contract in your name.
And because e-contracts are typically in English, car buyers who don’t understand English won’t be able to review the e-contract.
What should you do if it happens to you?
First, talk to the dealership. Maybe an honest mistake was made, and they will correct it right away. If not, contact the company you have a discrepancy with and explain the situation. Sometimes they can correct the problem.
Along with the time and frustration it can take to correct the problem, you may also have to spend time getting the loan removed from your credit history.
If you are the victim of this type of e-contract scam, can you sue the dealership?
If a car dealership uses an e-contract to defraud you, it is considered auto dealer fraud and you may be able to take legal action against them.
Although e-contracts are becoming more and more popular, you’re better off going to a dealership that sticks to the tradition of paper loan forms. But if you are the victim of a scam, there are steps you can take to correct the situation.
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