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Our consumer protection firm handles claims involving defective vehicles and products, auto and consumer fraud and violations of renter’s rights. For more information about each practice area, please click on the appropriate link. To find out more about our firm, practicing attorneys, or where we’ve been seen or heard in the news, please visit those sections of the site.


If you think your consumer rights have been violated and you need legal help, call Krohn & Moss, Ltd. Consumer Law Center® toll free, at 1-800 US LEMON® (800-875-3666) for a FREE CASE REVIEW, or complete one of our online submission forms.



Top Ten Auto Scams


Scam 1: Failing to Disclose or Misrepresenting Prior Accident or Damage History
Used vehicles have an unknown history of ownership. The best used car buy is one that has been well taken care of and well maintained. Thus, the consumer is wise to, and often, asks the salesperson questions about the vehicle’s history. Virtually every response is that the vehicle has never been damaged or in any previous accidents. In fact, the salesperson rarely ever knows whether what he or she is saying is true. Every vehicle goes through some inspection by the service department of the dealership when it is first brought into the dealership. Most trained technicians can identify certain damage to a vehicle by noting re-painting, welding, or even replacement parts. However, this information is never passed on to the sales force of the dealership, nor is any record of these findings maintained. Therefore, the salesperson is really not the person with knowledge of the vehicle history, yet will answer the questions a consumer asks with the answer the consumer wants to hear so that he or she can make a sale. Remember, they almost always paid on a commission basis. If they tell you the vehicle is damage free and they are wrong, their conduct is considered fraudulent.


Scam 2 – Failing to Disclose Salvage/Rebuilt History of Vehicle.
A salvaged and/or rebuilt vehicle is one that has been damaged so severely that the insurance company of the previous owner of the vehicle considered it a total loss. That is, it was severely damaged. Insurance companies will then take the vehicle and have it rebuilt and restructured, however, rarely if ever is the vehicle restored to a safe condition. To that end, every state has a law regarding the disclosure of the salvaged history on the title of the vehicle (known as a “branded title”) and requires that certain notification of that history be given to the potential consumer in writing before the actual sale of the vehicle. Any failure to disclose a salvage or rebuilt history is a violation of law.


Scam 3 – Spot Delivery Scams
Spot Delivery is when a dealership allows a consumer to drive the vehicle home off the dealer’s lot even though the sale is not consummated and complete. When a consumer seeks to finance the purchase with the aid of the dealership, the dealer most often does not get a banks acceptance while the consumer is there at the dealership, and will let the consumer take the care home while the dealer’s finance department works on financing. While in most states spot delivery is not illegal in and of itself, and can be helpful to both parties, the situation opens up opportunities for the dealer to implement various scams. For instance, once the consumer has grown accustomed to the car, perhaps proud of their new purchase and has shown it to friends and family, they would not hesitate to agree to sign a new, revised contract that has increased the payments. Also, the consumer would agree to bring more money for a down payment. Depending on how or why the dealer got the consumer to consent to come back in, certain consumer rights statutes may be violated. These are also referred to as “yo-yo” scams because the dealer sends you out and pulls you back in like a yo-yo. Most importantly, if a dealer is unable to obtain financing on the terms previously agreed upon, the consumer does not have to agree to new terms, and can elect to cancel the deal altogether. In that case, the consumer is entitled to whatever down payment or trade-in vehicle that they gave to the dealership with no amount to be withheld.


Scam 4 - Negative Equity/Trade-In Overestimation
This occurs in a transaction that includes a trade in vehicle where more is owed on the trade in vehicle than the actual cash value of the vehicle. Generally, a customer is led to believe that the dealership is valuing the trade in vehicle at the same amount as what is still owed to the finance company. Thus the customer is led to believe that they won't owe anything on the trade in. In reality, the secret actual cash value (the value the dealership is really giving the trade in) is less than the amount owed. The difference is added to the cash price of the new vehicle or the capitalization costs of a leased vehicle. By inflating the cash price or cap costs of the vehicle you, the customer, are illegally paying more in sales tax and registration. The dealership may also be violating the laws related to selling a vehicle for the advertised price (a dealership may not sell for more than advertised price.) This can also be a violation of the Federal Truth in Lending Act (TILA). A similar illegal practice may occur when a lease balance is paid off. These are still illegal practices even when the customer is told what is happening.


Scam 5 - Packing (Inflated Monthly Payments)
Often times, consumers come into a dealership more concerned about how much the monthly payment for a vehicle will be rather than the overall price. In a packing case, the customer is quoted a monthly payment that they can afford, but is inflated to a certain degree. Once the customer accepts the monthly payment amount, the dealership adds accessories (alarms, service contracts, GAP insurance, paint/fabric protection, window etching, low jack, etc.) in order to reach the inflated monthly amount. The customer does not realize that the accessories are optional or that they are paying extra for the accessories. They are led to believe the accessories are included with vehicle or not told at all.


Scam 6: Rewritten Contracts/Backdating
Often a customer will not qualify for financing upon the terms on the first contract. The customer may be required to increase a down payment, higher APR, etc. in order to qualify for a loan (See Spot Delivery Scam). The dealership has the customer come to sign a second contract with the different terms but backdates the second contract with the date of the first contract. This affects the finance disclosure laws (TILA) in that the customer is being charged interest for a time period in which the contract is not yet in effect, etc. In addition to making a material misrepresentation regarding when the customer takes the obligation of the new contract, a backdated contract often also violates the single document rule because another form (usually called Acknowledgment of Rewritten Contract) has the actual date when the contract was signed. Further, many customers are not told that they do not have to sign a second contract, instead they can choose to cancel the contract and return the new vehicle and have the down payment and trade in vehicle refunded (see Spot Delivery Scam).


Scam 7: Changes to the Advertised Price
Most state laws state that a dealership cannot sell a vehicle for more than the advertised price (even if the customer is unaware of the advertised price.) What is an advertisement is broadly defined to include window stickers as well as the usual media ads. If a dealer inflates the cash price of vehicle, this would result in a higher than the advertised price. A higher price affects the amount the customer is charged for taxes, licensing & registration fees and finance charges.


Scam 8: Using Your Language Against You
Most states provide that if a lease/purchase of a vehicle, is primarily negotiated in Spanish, then a Spanish translation of the contract must be provided to the customer prior to signing the English language contract OR some waiver must be signed clearly stating that the terms of the contract were explained in the consumer’s language and that they understood it. Failure to comply gives the customer right to rescind.


Scam 9: Sale of Rent-a-Cars
Many times, dealerships will get their used vehicles from auctions, and in those auctions are large fleets of former rent-a-cars from major rent-a-car companies. These vehicles are subject to driving by numerous different people with different habits. With no pride of ownership, people tend to abuse these vehicles and treat them in ways they would not treat their own car. Thus, they tend to be of lesser value than another vehicle of the same age and make that was owned by an individual. In a few states, the fact that a vehicle was a rent-a-car must be disclosed in writing. In those that do not have this requirement, dealers typically hide this information, or even misrepresent the vehicle’s history in an effort to make the sale. Dealers tend to label these vehicles as “Program Vehicles” giving it the impression that the history is of some higher quality. If the fact that the vehicle served as a rental is material (consumer would not buy it had they known that fact) then the deception resulting in keeping this fact from the consumer is fraudulent.


Scam 10: "Certified" Used Vehicles
Several manufacturers and some dealerships have certified used vehicle programs. Generally, a used vehicle that passes certain standards is labeled "certified used" and is suppose to guarantee to the customer that the used vehicle is in good working order and free from major structural damage (including prior accidents.) However, a lot of vehicles that don't actually qualify as "certified" under the standards advertised are being labeled certified. Customers are ending up with certified vehicles with frame damage from prior accidents.


Fraud prevention tips for consumers


  • Check the vehicle over thoroughly to see if the actual condition matches the mileage that is showing in the odometer.


  • If the vehicle has been repainted, look to see which parts have been replaced. Paint can be used by offenders to cover older parts, thus giving the vehicle a newer look.


  • Look in the left door frame, inside left front window, in the glove compartment, under the hood, or in the trunk, for maintenance and oil change/lube stickers that could contain accurate mileage information.


  • Be wary of a vehicle advertised or represented as part of a fleet, that has especially low mileage.


  • The numbers should be aligned properly on the odometer gauge, crooked or misaligned numbers could be a sign of tampering;
    *GM vehicles with mechanical odometers have black spaces between the numbers. If the spaces are silver or white, the odometer has been tampered with.


    *Electronic odometers are built to show tampering, represented by an asterisk or some other mark in the display. Your owners manual will have more information on this feature.
  • You MUST be provided with a written statement of the actual mileage disclosed on the odometer at the time of purchase, if you are not given this document you may already have a claim under the Truth In Mileage Act.

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