1. Bait and Switch
This is the most classic types of scam. The dealer advertised the vehicle with a low price, or interest rate, or any other promised representations in the advertisement, in order to lure a customer into the dealership. After the customer comes into the dealership, he or she is met with a bunch of lies, such as the advertisement is expired, the price has gone up, the advertised car has already been sold, other excuses why the advertisement is no longer valid. Instead, the customer is offered a more expensive vehicle than the one advertised, or a loan with a higher interest rate, etc.
2. “Packing the Contract”
Some dealerships “pack” a contract with add-ons like service contracts, “protection packages, “warranties, options and accessories that the customer did not ask for, and then lie and tell the customer that the advertised car must be purchased with the options.
3. Down Payment Bank Fraud
When the customer does not have the money for any down payment, the dealer lies on the credit application and fills in an amount for the down payment, while jacking up the price of the vehicle. The dealer does not tell the customer, or encourages the customer to sign documents quickly without reading the documents.
4. Hiding a Lemon (A Wreck)
Failing to tell the customer about a hidden defect, such as a bad engine, leaking roof or other major defects.
5. Lying About Your Credit Score
The dishonest dealer tricks customers into believing the customer has a worst credit than the customer’s actual credit in order to convince the customer to accept a higher interest loan. The dealer gets a higher a fee from the bank for selling a high interest loans as bank makes more money on high interest loans.
6. Trade-in Fraud
Lying to customers about the value of their trade-in in order to pay the customer less and make money on the trade-in.
7. Requiring Options to be Purchased
The dealer telling the customer that they have to buy additional options or accessories for the customer to qualify for financing, a lower interest rate or a reduced price.
8. The “Yo Yo Sale”
You signed all of the papers and take the car home. The next day, the dealer calls you and tells you to return the car as you did not qualify for the loan with the interest rate listed on your loan papers, but tells you he can get you qualifies for the loan with a higher interest rate, or with a larger down payment. The reason the dealer does this is to make more money.
9. Not Providing a Copy of Documents to The Customer
A dishonest dealer may not provide you with copies of documents. They may not want you to go through the documents at home and perhaps cancel the contract. Certain state laws, including New Jersey, permits the cancellation of a contract within three (3) days.
10. Arbitration Clause Scam
A dishonest dealer will always try to protect their dishonest acts. One way to do that is by having a customer sign an arbitration agreement, which is sometimes on a separate piece of paper or a clause as part of the sales and finance contract. The dealer never explains arbitration to the customer. The customer is simply asked to sign a whole bunch of papers. The dealer almost always never explains the contents of any documents the customer is signing, except to tell them what their “monthly payments” is going to be, as most people only care about how much they will pay every month.
An arbitration agreement prevents any lawsuit against the dealer for any fraud or misconduct. If a claim is made against the fraudulent dealer, it would have to be decided by an arbitrator. In arbitration, the dealer almost always wins because the arbitrator is paid by the dealer. Before the customer sign any documents, the customer should read it carefully. If the dealer asks you to sign documents and rushes you to do so, then you may be able to get a court to throughout the arbitration agreement.
The above are just some of unethical, fraudulent and illegal conducts of a car dealer. The New Jersey Consumer Fraud Act, which is one of the strongest consumer protection laws in the nation, provides for mandatory treble damages and reimbursement of reasonable attorney’s fees and costs for any customer who suffered a loss as a result of an illegal act of a dealer.