The auto industry and especially the car dealers are rife with scams and auto fraud and the potential car buyer needs to be armed with the knowledge of how these scams work and how to avoid them. Of course, there are many dealers that run businesses and can get buyers into a deal without using fraudulent means. However, there are always those individuals or companies that are looking for ways to take consumers for a ride.
The state of California, San Diego and Los Angeles in particular, is home to many of these scam artists. Even smaller states have their share of fraud cases and attorneys there are as busy as lawyers in California market. If you are fortunate, you won’t be a victim of one of these disreputable dealers, but it is wise to be aware of potential scams before you head to the dealer. Here are some tips on dealing with auto fraud.
Often people who have bad credit are the victim of auto fraud at dealerships. They are easy prey, often due to the fact that they believe they cannot get financing. The worst offences usually occur in the finance office, where the potential buyer often lets their guard down. One way to lessen the chance of being scammed is to show up with no trade and to have your financing done through your bank, with a bank draft in hand.
One of the most common frauds committed by car dealers and one that attorneys see frequently brought to them is the advertising fee scam. Dealers slip into the contract an advertising fee. Often times the advertising fee is on the factory invoice. Dealers add in a second advertising “fee” which becomes pure profit for them.
The way to avoid it is to simply ask that it be taken off the contract. If the dealer tells you that the factory doesn’t charge them an advertising fee, have them show you the invoice. If there is no fee on the invoice, which is unlikely, it is okay for the dealer to charge between 1% and 3% of the Manufacturers Suggested Retail Price or MSRP for an advertising fee. In case it does not appear on the invoice, then the fee is completely negotiable. If it does appear on the invoice, then that is a case of dealer cost and is not negotiable.