How to Prevent Auto Fraud

Picking out a new car is often an exciting time, but auto fraud can turn that milestone into a negative experience that leaves you in a bind.

Even though you should be able to trust auto dealerships, not all of them are honest and trustworthy. Find out what auto fraud is and how you can protect yourself.

Auto fraud — or auto dealer fraud — refers to a car dealership using deceptive, unfair or illegal practices when selling you a car. State and federal laws are put in place to protect consumers from these practices. They typically cover the entire process, including advertising, negotiating and financing vehicles. Lemon laws are related protections for consumers that govern dealerships selling defective vehicles.

What Are Some Examples of Auto Fraud?

Not every car-buying situation that ends poorly is auto fraud. There has to be deception involved for an auto fraud claim. Here are some examples to better illustrate what qualifies as auto dealership fraud:

• Withholding information about a vehicle that might make it less desirable, such as the vehicle having been in an accident
• A final price on the contract that's higher than what you agreed upon or what was advertised
• Bait-and-switch advertising where the dealer claims the vehicle at that price is no longer available when there were never any vehicles available for that price
• Adding extra accessories, warranties, coatings and other items you didn't agree to, hoping you won't notice the extra expenses
• Tampering with the odometer
• Yo-yo sales where the dealer lets you take the car without finalizing everything, only to tell you the original transaction fell through and now you have to accept different — and usually worse — terms

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How Do You Avoid It?

Being aware of various auto fraud situations can help you spot the violation before you sign a contract. Always think critically about what the salesperson is telling you to make sure it sounds legitimate. Read everything and ask lots of questions before agreeing to purchase a vehicle.

Here are some specific things you can do:

Request Vehicle History Report

Ask the dealer for a vehicle history report on used vehicles. This should show if the vehicle has been in an accident.

Choose Reputable Dealerships

Stick with dealerships that have a good reputation. Read reviews on dealerships before you start shopping for a vehicle to look for red flags.

Read Everything

Don't assume the dealership is being honest about the details of the contracts. Read everything you sign and verify that the information matches the agreement you made with the salesperson. Make sure the price matches and that there aren't extra fees.

Finalize the Deal

Make sure the deal is finalized before you take the vehicle.

Use Your Judgment

Avoid deals that seem too good to be true. If your gut tells you a situation isn't what it seems, don't be afraid to question it.

Have the Vehicle Inspected

If you aren't certain about the condition of the vehicle, have it inspected by an independent mechanic before you buy it. You can't trust that the dealership has done a complete inspection or has revealed all the issues they found.

Don't Accept Verbal Agreements

Everything about the deal should be in writing. The dealership might not follow up on verbal agreements, and you'll have no proof that they agreed to those terms.

Ask Lots of Questions

If the salesperson doesn't have answers or avoids your questions, it could be a red flag. Repeat certain questions or reword them to see if the salesperson gives the same answer.

Be Prepared to Leave

If you suspect the salesperson or dealership is being shady, don't be afraid to leave without buying a car. You could save yourself a lot of lost money and headaches.

Protect Yourself — Even If You Aren’t Buying From a Dealership

If you’re buying from an individual instead of a dealership, you should still take steps to protect yourself. It’s a good idea to get the car inspected by a mechanic and get the terms of the sale in writing, no matter who’s selling the car.

What Do You Do If You're a Victim of Auto Fraud?

If you've been a victim of auto fraud, collect as much evidence as possible. An attorney can help you collect adequate evidence and advise you on how to proceed. In some states, you're required to contact the dealership first and allow them to make it right. If they don't, you can file a lawsuit. You'll have to prove that the dealer committed fraud and that it created a financial loss for you. The court may decide to let you surrender the vehicle and get your money back if you no longer want it, or it might decide on other ways to remedy the situation.

You can also contact your state's department of motor vehicles, consumer protection agency or another governing agency to report the behavior. The agency should initiate an investigation into the car dealership. You'll likely need to complete an official complaint form with the details of the situation.