What You Should Know About Rewriting and Backdating Contract Scam
When you are in the market for a car, the first thing you should have is knowledge. Knowledge about your credit score, what you can afford, and most of all knowledge of car dealer scams that are practiced every day by shady auto dealers. One of the common frauds is the rewriting or backdating of the contract.
A customer signs a contract with a certain percentage rate and puts a down payment on the car of his choice. A few days after signing, the dealer tells the customer the interest rate will have to be higher, or a larger down payment is needed to qualify, so another contract is drawn up. The contract is then backdated to the date the original contract was signed. The customer is forced to pay finance charges back to the original date of signing.
The customer is charged interest for the period between the two dates effectively violating consumer protection laws. This is not only a material misrepresentation of when the customer takes the contract, but also violates the single document rule since another form has been signed. According to the requirements of the Automobile Sales Finance Act, obligations that both parties undertake in a transaction must be reflected in a single document. Customers do not have to sign the second contract. Instead they can cancel the original contract, and return the car and get the down payment refunded and have their trade-in returned. In addition, a dealer only has ten days to change a contract. If this time has lapsed, there can be no contract change.
It is very common to have yo-yo financing and spot delivery car dealer scams in the same transaction as the backdating scam. In these scams the finance manager leads the customer to believe they had finalized the deal only to be told later that the previous agreement needs modification.
The backdating scam may be done out of greed or simply for the convenience of the dealership. However, backdating or rewriting a contract is illegal in the United States and if you face any of these car dealer scams, contact a dealer fraud lawyer.