Dealer Fraud and Self-Help: A big mistake?
Often times we come across clients who have been defrauded by an automobile dealership and are eager to take matters into their own hands and rectify the wrongs. From a layman’s perspective the idea of doing so appears harmless and in fact righteous. However, when analyzed from a legal perspective the idea of taking self-help measures is riddled with pitfalls and negative effects on the consumer.
Unfortunately, when an individual has been harmed financially and is hurt emotionally, he or she often does not see these pitfalls and when addressed by a consumer attorney starts to feel apprehensive, fearing that the dealer fraud attorney himself might mislead them. It is a human nature to react in such a fashion and to start thinking that one was tricked once and is not going to allow the mistake to be continued: therefore, justified in every reasonable way to take matters into his or her own hands.
If you are a victim of auto dealer fraud and you have this urgent feeling of handling the matter on your own I advise you to stop, to read this article and to take some time to think things over before taking steps, which might in fact harm your case rather than help you.
There is a reason why I have been practicing in this area of law for half a decade and why I have an extremely high success record. So take a step back and see why retaining an experienced dealer fraud attorney is always hands down the best first step when you learn that you have been defrauded by an automobile dealership.
First off, in any given situation when confronted with a problem it is always a good idea to let yourself cool off before you take any steps. Often times I have clients who find out about the dealer fraud and immediately go to the automobile dealership and create a lot of tension and drama. In fact I have had clients who were nearly arrested for disturbing the peace. In other cases, I have had dealers counter claim damages and threaten filing assault charges when my clients walked in and started an argument which resulted in an altercation. And guess what – the automobile dealership caught it all on tape. The worst thing you can do for yourself is to give the dealership such ammunition against you. I would hate to see a client go to jail or give up his or her civil claims for damages arising from the dealer fraud case in exchange to avoid being turned to the police.
So rule #1 – Keep matters calm and collected.
Secondly, dealing with the automobile dealership on your own is generally same as asking to be defrauded again. Let us say you just found out that you have been a victim of dealer fraud. You are clearly upset and eager to confront the perpetrators of this malicious fraud which has cost you thousands of dollars and so you take your paperwork and your vehicle and go straight to the automobile dealership. You are calm and collected and have no intent to stir up any trouble. You just want a fair resolution. Well, you’re just walking back into the hands of the very same people who had the audacity to defraud you. They have make an extra couple grand due to their successful scheme to cheat you and you are now attempting to reason with them and to take back what is already in their pocket.
First off, you are unaware of your full range of legal remedies – perhaps you should get $2,000, perhaps you should get $10,000, or perhaps you should get $50,000. Only an experienced consumer attorney can tell you the true value of your case. So you walk in and, if you are lucky, you get to meet with the general manager to discuss your grievance. The general manager is the best salesman on the premises. He is also usually the sole owner of the business if you are dealing with a small lot or at least a shareholder franchise automobile dealership. So you are talking to a person who has a direct personal interest to pay you less, if anything.
Their first response to your concern will be that
- they had no idea about the issued with the vehicle
- they would never knowingly mislead you
- they will do anything they can to help you
Of course this is assuming they are willing to talk to you. Half of my clients tell me that when they tried to complaint the automobile dealership personnel game, they run around, never met with them and on occasion threatened to call the police if they did not leave the premises.
Assuming you are dealing with a more cordial automobile dealership, they will meet with you and start negotiating over a resolution. The most frequent resolution is where the consumer is convinced to switch into another vehicle. For example, if you purchased your vehicle for $40,000 and it was now supposed to be worth $20,000 but due to frame damage and other issues it is now worth $15,000, the automobile dealership offers you to honor the $20,000 price. Or out of the goodness of their heart they in fact offer to credit you $25,000 for that car.
So, in your mind you are thinking you are getting $5,000 extra!
Wrong – you are getting $15,000 less than you should be getting.
Plus you are being sold another vehicle for an incredibly bad price since you are a captive audience – their offer is to credit you $25,000 and let you pick any car on the lot. This means you have no leverage to negotiate on the new car and thus they will most likely overcharge you on the new car and allow themselves to essentially walk away from this scenario without giving you anything. All you will have accomplished is having purchased another vehicle from the people who defrauded you.
I have seen way too many potential clients enter bad dealer on a subsequent vehicle after attempting to confront an automobile dealership in regards to their original purchase. Why walk into a room with professional salesman who has already defrauded you once without havinga dealer fraud attorney by your side? Would you walk into a boxing ring to take on a professional boxer? Just because you have learned that you have been defrauded does not mean that you can take them on without legal help. This is why the laws were created and fortunately for you the State of California has the most pro-consumer laws you could ever ask for. You are entitled to get a FREE attorney fight for you. So there is no reason for you not to pick the best consumer attorney you can find and have him do your battle and hand you your recovery.
Now let me go on to discuss some other pitfalls of taking self help measures against automobile dealership. Unfortunately, over the years I have seen all of the following done by potential clients prior to retaining me and I assure you that none of these actions will do anything but harm one’s case. Often clients refuse to take back possession of a vehicle once they find out that they have been defrauded. If the vehicle is at the selling dealership for some repairs they simply call and refuse to take it back. If the automobile dealership is at another shop, they notify the selling dealership of the vehicle’s location. If the automobile dealership is in their possession they drop it off at the selling dealership and walk away leaving the keys. I cannot stress enough as to how bad of an idea this is. The fact is that vehicle is still in your name. Whatever happens to the vehicle it is your responsibility and you are financially liable for it.
Here is a myriad of reasons why you should not surrender possession in such a manner:
- If you leave the vehicle with another shop or even the selling automobile dealership they could rightfully charge you a daily storage fee. So if you leave it for 3 months they can and likely will send you a bill for $50 per day totaling $4,500 for storage! If you end up suing them later on they will demand that the Court deducts their storage fee from whatever they owe you due to the fraud. Just because they owe you for example $10,000 does not mean you get to park your vehicle at their lot for free until the matter is resolved. If you happen to leave the vehicle at a third party lot (say you bought your vehicle from Longo Toyota but you leave it at Keyes Toyota) than they have an absolute right to charge you storage fees since they have nothing to do with your claims for dealer fraud.
- Another reason not to leave the vehicle is that if you leave it while it is being repaired the repairing facility can assert a mechanic’s lien. If you refuse to pay their repair bill and take possession of the vehicle they will eventually auction the vehicle and retain the cost of their repairs, storage and auction expenses. All of this will be offset against your dealer fraud case. In theory, if you have a case worth $10,000 you could end up being responsible for more than $10,000 in repairs, storage and auction costs.
- Most individuals who surrender possession of their vehicle also stop making payments on them. This is another extremely harmful step to take when you discover that you have been defrauded. First off, the financing institution’s liability for the dealer fraud committed by the selling dealership can vary. Sometimes the bank is equally responsible and yet other times they are not. Thus if you fail to pay the bank you may be breaching your agreement with the bank. If your case happens to be the type where the bank is not responsible than the bank will ultimately repossess the vehicle, auction it off, likely recover much less than the loan balance, and hold you responsible for the difference between the auction sale price and the loan balance. Even if you have a perfect case against the selling automobile dealership you might end up recovering for example $15,000 against the dealership but only to hand it all to the bank for the loan deficiency. In the same scenario, if you had kept possession of the vehicle and continued to make payments you would have been able to pocket that same $15,000.
- Another common pitfall is when a consumer who has just purchased a vehicle discovered that he or she was defrauded and starts engaging with the automobile dealership in arguments, all the while he or she does not make the first monthly payment and the dealership never sends a bill or mentions the monthly payment. The consumer might think that there is no need to make the first payment due to the fact that there is an ongoing dialogue with the automobile dealership. In reality, the dealership might be purposefully causing a delay so that the consumer defaults on the first payment. This gives the bank or the dealer (if the loan has not been funded by any bank by that time) to repossess the vehicle. Once they repossess the vehicle they will assess repossession charges, towing charges, storage charges and ultimately sell the vehicle for a cheaper price. All of these charges and the difference between the contract value and the final sale price will be asserted against the consumer. Once again, the consumer who had a legitimate claim against the dealership may end up with no claim at all or may even end up owing money to the automobile dealership.
- Over the years I have also seen potential clients abandon their vehicles, register them as non-operational with the DMV, park the vehicle somewhere without insurance coverage, etc. These are all extremely bad ways to approach a dealer fraud case. Ultimately, the consumer as the effective owner of the subject vehicle is responsible for it and must act diligently regardless of the fact that he or she has been defrauded by the selling dealership. If the vehicle gets totaled and there is no insurance coverage than the consumer will be held responsible for it. If someone borrows the vehicle or if the vehicle is abandoned and a teenage takes it for a joyride and runs over someone – the consumer who is the registered owner will be responsible for it.
I cannot stress enough when I say that self help is absolutely the last thing a consumer should do when encountering a dealer fraud situation. In the State of California consumers are extremely fortunate to have extremely strong protections under the law. As such, there is no reason why a consumer facing a dealer fraud issue should ever attempt to deal with it before consulting and retaining a consumer attorney. Each month my office represents dozens of consumers in dealer fraud cases. We evaluate all cases at no cost and if we determine that you have a legitimate case than we will agree to represent you at no cost to you. Our goal in all these cases and the most frequent outcome is a recovery of all your actual damages plus a recovery of our attorney’s fees and costs. Thus you as the consumer have an opportunity to have us enter the fight ring for you, win your case and hand you your prize at no risk to you.
I hope that you the reader found this article useful and that even if you do not decide to retain me to represent you in your dealer fraud case you at least to not commit any of the aforementioned pitfalls. Thank you.
Very truly yours,
Attorney At Law
The Law Offices of Hovanes Margarian
The Consumer Protection Advocates