Auto Fraud: Non-disclosure of Preexisting Problems

One of the most common forms of auto fraud is failing to disclose preexisting and/or known problems with the vehicle. Cars often have documented histories of mechanical problems. Some dealers try to sell vehicles with known mechanical problems by either misrepresenting the car’s condition or simply by not telling the prospective buyer about these problems. Do not be fooled just because a vehicle appears cosmetically clean and mechanically sound. If the vehicle you are interested in comes without a warranty or “as is,” you should be extra cautious.

One form of hiding a vehicle’s history is called “lemon laundering.” Many states, including California, have lemon laws, which essentially require a manufacturer to repurchase a defective vehicle. Lemon laundering is the resale of these defective vehicles without disclosing their prior history. A possible sign of lemon laundering is when a car that is close to new is being sold as used.

Other forms of this type of auto fraud include misrepresentations about prior owners or prior use. For example, dealers often tell consumers that a car has only had one owner, when in fact it has had multiple owners. Dealers may also conceal the fact that a vehicle was a rental car. Dealers may also hide a vehicle’s history as stolen and recovered; stolen vehicles sometimes have undetected and unrepaired problems.

To avoid this practice, you should have the vehicle you are interested in inspected by a mechanic and/or an auto body repair person before you buy it. You should also get a vehicle history report. Look for evidence of a questionable history. For example, was the vehicle owned by multiple owners or a rental car company? Does it appear as if a manufacturer repurchased the vehicle? In more complicated cases a complete title history may be obtained from the DMV.

If you suspect that you have been a victim of this type of fraud, you may wish to consult with an attorney who specializes in auto fraud.