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Fraud Articles:  Used auto sales fraud



Link: http://www.nwcu.com/knowledge_center/Consumer_Help/used_auto_sales_fraud.html
Source Name: Northwest Community Credit Union

Apply caution if you buy a used car. Numerous pitfalls await the unwary used car buyer. Northwest Community Credit Union works with a network of preferred auto, boat and RV dealers throughout Oregon. Our dealers are monitored both for the excellence and the integrity of their business. Many car dealers are perfectly legitimate; however, even the most honest dealership can have dishonest salespersons on their staff. Some of the common tactics of dishonest dealers and salespersons follow:

Defect cover-ups

Many defects and problems can be temporarily hidden from unknowing used car buyers. Unscrupulous used car dealers include the following in their repatoire:
  • Adding oil treatments or damping agents (like honey or sawdust) to cover up cracked blocks, transmission problems or other engine defects
  • By-passing a vehicle's heater to conceal a leaking heater core
  • Cheap paint jobs that won't look good after the first heavy rain
  • Cheap seat covers to hide upholstery burns and tears
  • Coolant additives to cover a leaky radiator
  • Paint touch-ups to hide pits, dents or rust spots
  • Pressure washing engine compartment to hide oil leaks or spray
  • Quick fiberglass jobs or poor filler work to cover areas which have rusted through
  • Spray painting inside trunk to cover-up leaks and rust
  • Use of battery chargers to hide electrical recharge problems

Misrepresentation

Some used car salespersons misrepresent the condition of used cars. They may also make unfounded statements about condition or reliability. Sales claims, such as "this is a great bargain," are not overly dishonest; however, be aware that a salesperson can claim a car is in top shape when it actually has serious defects. Verbal promises of condition are perfectly legal, even when the salesperson knows the buyer will suffer repair bills for undisclosed problems.

Odometer roll back

In many areas, the practice of turning back a used car's odometer mileage is fairly widespread. The buyer is misled that the car has been driven less than actual mileage. This can result in unexpected repair costs, missed service schedules, and an overvalued sticker price for the buyer.

Reselling "totaled" vehicles

This unethical practice is more prevalent in some states than others. Dishonest, or fly-by-night, used car sellers will re-title or hide the histories of cars which have been totaled by accident, flood or other damage. Such cars can be bought very cheaply from auctions or junkyards after an insurance company has "totaled" or deemed the car to be damaged beyond the value of getting it repaired. Unsuspecting buyers have purchased frame-damaged or water-damaged cars which can never be satisfactorily repaired. Totaled cars can also show up at honest dealers if the dealer unknowingly buys such a car at auction or on trade-in.

Warranty misrepresentation and repair promises

Some salespersons will promise anything to make a sale. Countless consumers buy used cars based on verbal promises to repair whatever the buyer finds wrong with the car. In the end, the buyer discovers the ironclad sales contract means the car was sold "as is." Once a buyer signs paperwork to buy "as is"-even if the papers are rushed past the buyer's attention-there is no recourse for repair. Repair promises have also been used to push through sales on otherwise impossible-to-sell cars. A salesperson can promise to replace bald tires or repair obvious problems; however, if it's not in writing, it's only a promise. Most states have lemon laws which only protect consumers against major mechanical breakdown.

Pointers for used car shoppers

  • Call the Better Business Bureau and check up on the used car dealer before you buy
  • Check a car's title history with the Department of Motor Vehicles
  • Don't be afraid to call and ask the previous owner about the car-if possible-verify condition and mileage
  • Get any promises in writing, before you buy
  • Get a signed odometer statement-this shows mileage at time of purchase and verifies the truth of this mileage
  • Have a body shop examine the car for undisclosed accidents or shoddy body repairs (you may have to pay for this)
  • Have an independent mechanic examine the car (you may have to pay for this)
  • If you make a deposit, make sure you have a sales contract approved by the "management"
  • If you make a deposit, make sure you get a receipt that spells out the conditions for refund (or lack thereof)
  • Look around for oil-change stickers or repair invoices that reveal previous mileage
  • Never buy at night, in the rain, or under conditions that hamper inspection
  • Never sign a purchase order or sales contract with blank spaces
  • Report all fraudulent used car sales experiences to the Department of Consumer Affairs
  • Take your time when test-driving a car