Types of Auto Dealer Fraud

Auto dealer fraud can crop up at almost any stage of the vehicle purchase process, from advertising to signing on the dotted line. Here are some common states that can give rise to auto dealer fraud:

•   Incorrectly inflating a vehicle’s invoice price - The “invoice” is the amount that the auto dealer is charged for the vehicle, by the vehicle manufacturer. Examples of incorrect inflation of the invoice price include making additions to the invoice figure, when those charges were initially included in the invoice price (i.e. “destination” charges).

•    “Bait and Switch” – A form of false or unreliable advertising, in which a car dealer attracts customers to the dealership by advertising one vehicle at a certain price, then informs the customer that the particular vehicle is no longer available before using aggressive tactics to sell a different, more expensive vehicle.

•   Covering “Add-On” Up- covering up the inclusion of certain optional “add-ons” during the negotiation, or the costs of those add-ons, but including those add-ons in the final vehicle price.

•    Auto Trade-Ins – underestimating and underpaying for a car buyer’s trade-in auto.

•    “New” Dealer Returns – Selling a vehicle as “new” that was actually returned to the dealer because of a defect or persistent mechanical problem or was returned shortly after purchase for some other reason.

•    Recovered and Flood-Damaged Vehicles – In used car sales, failing to disclose that a vehicle has been designated “recovered” after a car accident, or has been flood-damaged.

•    Odometer Backoff- In used car sales, odometer “backoff” are intended to conceal a vehicle’s actual mileage.