Sadly, most of us have experience auto fraud or auto financing fraud.  Auto dealers and auto lenders are infamous for deceptive, unfair and fraudulent practices related to vehicle financing.  Here are a few to look out for:

Auto Fraud Scam #1:  Deceptive Pricing and False Advertising:

One of the most common types of auto fraud is deceptive pricing and false advertising about vehicle price. Many auto dealer abuses involve misrepresenting automobile pricing in advertisements, as well as deception as to how much a trade-in is really reducing the purchase price of the car.  (One good tip-off:  a guaranteed amount off for any trade-in, regardless of its condition, i.e. regardless of its actual value.)

Auto Fraud Scam #2:  Inflated Interest Rates:

Another common auto fraud scenario is overcharging on the auto loan’s interest rate.  Buyers may be misled into believing they are getting the “best” interest rate on an auto loan, when they are actually being charged excessive amounts of interest.  Because auto dealers often get fees from lenders based on the amount of interest buyers pay, the more a consumer pays in interest, the more profit the dealer typically makes.   One method of avoiding this auto loan scam is to investigate auto financing with a reputable lender prior to arriving at the dealer.  In addition, pulling your credit report prior to discussions with the auto dealer about financing can protect you from auto dealer misrepresentations about your “low” credit score or “problems on your credit”.

Auto Fraud Scam #3:  Unnecessary Sales Of Credit Insurance, GAP Insurance And Service Contracts:

In addition to fraud regarding the price of the vehicle and the price of the loan, auto financing fraud sometimes involves the auto dealers persuading consumers to purchase extra insurance policies, service contracts, etc. without the dealer properly disclosing the mark up of such insurance and the amount of commissions that the dealer receives for these policies. Worse, many of these policies do not actually provide the advertised coverage. Many consumers are convinced to purchase these policies because they are led to believe that the policies are not optional – i.e. that the policy must be purchased or the vehicle will not be sold to them.  Make sure you are absolutely clear on what types of extra policies and coverages are included in the price of the car and demand to know the price of the car without them.  Review each product independently and make sure you actually want it, keeping in mind that many dealers are keen on these products precisely because they offer the auto dealer a higher margin of return on the vehicle.

Auto Fraud Scam #4:  Yo-Yo Sales:

One particularly ugly form of auto financing fraud occurs when the auto dealer “concludes” the sale only to find that the loan the auto dealer was hoping to resell at a large profit can only be resold at a smaller profit.  The dealer’s remedy?:  Shift the cost onto the consumer by representing that the auto loan “fell through”, and demanding that the consumer pay additional financing charges or return vehicle.  This is one more reason to be wary of “dealer financing”, particularly when purchasing a used vehicle or using a subprime lender.

Schlanger & Schlanger handles auto fraud cases.  For example, we recently settled an auto financing fraud lawsuit filed in Federal Court (Eastern District of New York).  Our client responded to an advertisement to purchase a vehicle for one price and, through a variety of tricks and misrepresentations, including hidden “rate buy down” fees, costly “free warranties”, and misleading disclosures, he was roped into spending far more.  His complaints to the dealer fell upon deaf ears until Schlanger & Schlanger, LLP filed a lawsuit on his behalf to make the auto dealership, the warranty company and the current owner of the vehicle loan liable for violations of the Truth In Lending Act, the Magnusson Moss Consumer Warranty Act, and New York General Business Law Sec. 349, as well as for fraud, breach of contract, unjust enrichment, etc.  Defendants settled this auto fraud lawsuit for $36,000.

In another auto fraud case, we caught an auto lender trying to use a forged contract to squeeze more money from our client.  To read about these and other recent results the consumer lawyers at Schlanger & Schlanger have achieved for consumers, click here (hyper link to recent results).

Consumers have rights. If you are a victim of auto fraud or auto financing fraud, contact the consumer lawyers at Schlanger & Schlanger, LLP at 1-800-685-2500 or by filling out our consumer questionnaire.