Tag Archives: car dealer

What’s the absolute worst car dealer scam?

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At a time when the price of used cars is skyrocketing, and many people are flocking to buy used cars to reduce the risks of exposure to Covid posed by public transportation, are consumers getting what they are paying for? 

Unfortunately, many of them are being cheated, to the tune of thousands of dollars. Their lives are also often at risk, and tragically, some used car buyers and their families and friends are being injured or killed.

According to the Consumer Federation of America’s 2021 Annual Nation’s Top 10 Consumer Complaints, auto transactions top the list, leading to more consumer gripes to state and local consumer protection agencies than any other product or type of transaction. It’s been the same for a long time, year after year.

These days, American car buyers are paying more, and being treated worse.

Car dealers routinely rip off consumers in numerous ways. Like:

  • Advertising cars at one price — then after you are on the lot, charging double, or more, particularly if the dealer employs “e-contracting”
  • Forging signatures on documents
  • Selling junky cars that break down soon after you buy them
  • Selling cars that fail to pass emissions tests, and pollute the air we breathe
  • Selling dangerous cars that they know were severely wrecked, while claiming they have a “clean Carfax” so they must be OK
  • “Loan packing” — charging thousands of dollars extra for high-profit items such as worthless service contracts, GAP, theft etch, and other unwanted stuff
  • Overcharging for financing, in exchange for kickbacks from auto lenders
  • Racist financing and discriminating against people of color
  • Repossessing cars, even when the buyers are making all the payments in full and on time — basically, a form of car theft
  • Selling stolen vehicles
  • Selling cars with altered odometers, and lying about how many miles they’ve been driven
  • Charging bogus, inflated “document fees” or “concierge fees”
  • Yo-yo financing — getting you to sign a contract to buy a car on good terms, then after you drive off the lot, telling you that the contract isn’t valid, or the financing “fell through,” and demanding more — sometimes under threat of arrest for “auto theft”

All of those scams are costly and risky for car buyers, especially car buyers who are from communities of color.

But the absolute worst car dealer rip-off of all is charging consumers extra for dangerous, potentially deadly unrepaired recalled cars.

It’s not only corner car lots who are foisting off seriously defective deathtraps onto used car buyers, for top dollar. It’s also huge conglomerates like CarMax and even their competitors at online “disrupters” Vroom and Carvana, who all claim their vehicles have passed a thorough inspection, but fail to get the free repairs done to fix hazardous safety recall defects that maim or kill people.

How can a car that is so defective, it’s prone to catching on fire while parked in your driveway, pass any inspection? Or a car with bad brakes that fail?  Or with a steering wheel that may come off in your hands? What kind of inspection is it, that fails to catch and fix the safety defects that are likely to kill you?

Making this outrageous scam even worse, the perpetrators of this scam claim they “disclosed” that the vehicle had an “open recall,” attempting to shift the blame — and any legal liability — onto their victims.  Of course, they know that hardly anyone reads those “disclosures,” especially when they’re hidden in a huge stack of 30 + documents that you have to sign. 

And of course, the “disclosures” are usually only in English, and don’t really convey what’s at stake. There’s no skull and crossbones. Just a lot of long-winded, legalistic jargon.

Please don’t fall for this scam. Be sure any car you buy is actually safe, before you drive it away.

Best of all, don’t even set foot on a car dealer’s lot. Experts are sharing their 12 step-by-step tips for how to buy a safe, reliable vehicle that’s free from deadly safety recall defects, for a lot less than a car dealer would charge: 12 Easy Tips from auto experts

Stay safe and save not only your $$, but also your life!!!!!

Miami, FL car dealer charged with rolling back odometer

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According to news reports, Miami-Dade police recently arrested a used car dealer and charged him with rolling back the odometer on a used 2101 Mazda CX9, erasing more than 81,000 miles.

Electronic odometers were supposed to make it harder for car dealers to cheat used car buyers by lopping miles off odometers. But the switch to electronic odometers just spawned a black market in odometer-tampering tools that are cheap and easy to buy online.

The multi-billion $$ fraud continues to plague used car buyers. In fact, it’s ridiculously easy for crooked car dealers to engage in odometer fraud, with little fear of getting caught.

The National Highway Traffic Safety Administration is tasked with policing odometer fraud, but the agency is chronically understaffed and under-funded, and seldom acts unless they find a widespread pattern of illegal rollbacks.

One of the worst impacts of odometer fraud: victims of the illegal practice often end up having to pay out of pocket for expensive, unanticipated repairs that can leave them deep in debt or without a car.

A double whammy — even if you buy an extended service contract, they usually exclude coverage for vehicles with altered odometers.

How can you avoid falling prey to crooked car dealers who alter odometers? Check out CARS’ tips for how to get a good deal on a safe, reliable used car, without having to set foot on a car dealer’s lot.

Read more: Miami Herald: “Miami car dealer rolled back 81,000 miles off odometer, cops say”

“Arizona Auto Dealer Arrested, Charged with Fraud”

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“TEMPE, AZ (3TV/CBS 5) – A Tempe used car dealer arrested Wednesday is facing multiple charges of theft and fraud, accused of cheating clients out of hundreds of thousands of dollars.

Detectives with the Arizona Department of Transportation Office of Inspector General say Farhad Kankash, owner of Onyx Motorsports, allegedly committed fraud against both customers and lenders.

ADOT officials say Kankash had allegedly committed several types of fraud, including failing to provide titles to customers who purchased vehicles, not paying off liens on trade-in vehicles, and defrauding lenders by obtaining multiple loans for the same vehicle.”

Want to avoid being ripped off and having your life ruined by a greedy, sleazy car dealer? Here’s how to get a good deal on a safe, reliable used car without having to set foot on a car dealer’s lot:

12 Top Tips from auto consumer experts– step-by-step How to Buy a Used Car

Read more: AZFamily.com:  Arizona Auto Dealer Arrested, Charged with Fraud

Beware: Auto Lending Scams Can Cost You $$ and Harm Your Credit

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Times of crisis tend to bring out the best in some people — and the worst in others. At the same time the nation is cheering on the courageous doctors, nurses, emergency medical technicians, firefighters, delivery workers, grocery store workers, and others toiling on the front lines to save lives, unscrupulous auto dealers continue to scam car buyers who fall into their clutches.

Auto sales have plummeted drastically. Some states have ordered auto dealerships to close their doors. But others are allowing them to remain open, deeming them to be an “essential” service, particularly for performing safety recall repairs.

Consumers are wise to be wary about making a major purchase when they are being laid off in record numbers, or their jobs are uncertain, at best.  Plus no one knows for sure how long it will take for the economy to recover.

Auto manufacturers and dealers are responding to consumers’ anxiety and the downturn in car sales by advertising 0% financing and delayed payments, in an attempt to lure car buyers. But beware: many car buyers may not quality for those special rates, and after the “payment holiday” is over, you may be hit with hefty fees or other extra charges hidden in the fine print.

Even more than before, it pays to be cautious and shop around for credit before you buy.  The safest thing to do is to join a credit union and get financing approved before you shop for a car. NEVER trust a dealer to find you the best terms for an auto loan.

Car dealers don’t want you to know this, but they rake in extra profits from lenders in exchange for raising the interest rate on auto loans, above the rate you qualify to get, based on your creditworthiness. The extra kickback is known as the “dealer markup” or “dealer participation.” It’s usually split with the lender, and can add thousands of dollars onto the price of your auto loan. It’s added profit, at your expense, and a huge source of revenue for auto dealers and lenders.

Beware: Auto dealers often claim in advertising and in person that they are shopping around for financing in order to find you “the best rate.” What they really mean is the best rate for THEM, not for YOU. In fact, lenders compete with each other to offer dealers incentives and sweeteners for assigning auto loans to them — costing you more.

You may also be surprised to learn that even if you never buy a car from a dealership, but just happen to walk onto a car dealer’s lot and browse around or test drive a car, unethical dealers may get your name, then pull your credit report and shop around for financing — without your permission. Their goal: to find out what you can afford to pay, and how much added “markup”  they can get from various lenders for selling you a car, and assigning the sales contract to one of those lenders.

When dealers pull this stunt and shop around among many lenders, it’s known in the automotive trade as “shotgunning” credit. Under some circumstances, it may cause only a small dip in your credit score. But particularly if dealers pull your credit repeatedly, over a period of time, it can cause your credit score to plummet, greatly increasing the cost of credit for future purchases. It’s also an invasion of your privacy and may leave you more vulnerable to identity theft.

In one court case that is now pending in Pennsylvania, a consumer alleges that she popped into a Volkswagen dealership, but made it clear she wasn’t going to buy a car, and was just scoping out various models. She didn’t sign anything. But the dealer made 7 “hard pulls” on her credit, causing her credit score to take a nose dive.

According to the lawsuit, this was a violation of the Fair Credit Reporting Act. The complaint filed by her attorneys says that the Federal Trade Commission warned car dealers in 1998 not to pull consumers’ credit reports unless there is a  “legitimate business need for the information in connection with a business transaction that is initiated by the consumer.”

The FTC noted that the Texas Automobile Dealers Association asked for an official opinion whether federal law “allows a dealer to obtain a consumer report on a person who ‘comes to an automobile dealership and requests information’ from a salesman about one or more automobiles.” The FTC replied: “In our view it does not, because a request for general information about products and prices offered does NOT involve a business transaction initiated by the consumer.” (FTC Advisory Letter to Coffey, 2-11-98. Emphasis added.)

Bottom line: Especially now, you’re smart to shop around for credit before you set foot on a car dealer’s lot, and to be wary of enticing deals that sound too good to be true.

Has a car dealer “shotgunned” your credit, without your permission?  If so, we would like to hear from you. Here’s where to contact CARS: http://carconsumers.org/feedback.php

Thank you! Your stories help raise awareness and help prevent predatory auto lending practices that harm even the most savvy consumers and their families.

Read more:

PocketSense: “Is a Credit Score Affected by Car Dealer Searches?”

Credit Karma’s Advice “The Best Place to Get a Car Loan”

Too Risky: Buying A Car from a Dealer can Ruin Your Life

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The car dealership looks like a gleaming palace. But what is really happening inside?

Some car dealers sell vehicles they don’t own. They also fail to pay off the loans on vehicles that are traded in. They ruin their customers credit and sometimes also their lives.

Robert Anglen, consumer reporter for the Arizona Republic, investigated dealerships in Arizona that ripped off consumers in multiple states, leaving them with faulty vehicles and stuck trying to make loan payments on two cars — even ones they had traded in, that were sold to someone else. Here’s what he found:

Read more: Arizona dealer didn’t pay off trades or transfer titles

How can you avoid become a victim of an unscrupulous auto dealer?  CARS tips for how to get a good deal on a safe, reliable used car, without having to set foot on a car dealer’s lot:  How to Buy a Used Car, Painlessly.

National Automobile Dealers Association in denial about safety

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The President of the National Automobile Dealers Association, Colorado car dealer Jeff Carlson, claims that only 6% of recalled vehicles are “hazardous.” That means he thinks that cars like this one, that killed a 17-year-old Texas teenager, are NOT “hazardous.”

ABC News report: 17-year-old killed by exploding Takata air bag

Try telling that to her family.

That also means that he doesn’t consider any of these defects, which have killed and maimed many car drivers and their passengers, to be “hazardous”:

  • Stalling in traffic
  • Catching on fire
  • Faulty brakes
  • Steering loss
  • Seat belts that fail in a crash
  • Axles that break
  • Hoods that fly up while you’re driving in traffic
  • Sticking accelerator pedals
  • GM ignition switches that turn off and eliminate power steering and braking, and cause air bags to fail to deploy

Automotive News report: Carlson vows to press NADA’s fight against regulation

Bottom line: Carlson and NADA cannot be trusted to decide whether a car is safe to sell. When it comes to safety, they are absolutely clueless. And a real danger to American society.

Buy a car, go to jail

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California is on the brink of enacting an automotive Catch-22 that will cause more people to be pulled over by police and ticketed. For what? The crime of having expired  temporary license tags on their cars.  Even if they haven’t received their permanent license plates, through no fault of their own.

California allows car buyers only 90 days to put on their permanent plates. With NO exceptions. So — what happens when car dealers fail to submit the registration forms and go out of business, leaving dozens of consumers in the lurch? Or when the Department of Motor Vehicles messes up? Or when the plates are sent to the wrong address, or stolen?  YOU are out of luck.

In fact, the law says you have to put the plates on as soon as you get them, or within 90 days, whichever comes first. But what if you don’t get them within 90 days?  Tough. Try calling the DMV and the dealer. Good luck with that. And here’s the kicker: There is NO law that requires car dealers to ensure that the plates are sent to you within the 90 days. Gotcha. Catch-22.

If the dealer fails to submit the registration, YOU are subject to being pulled over and ticketed. If you get too many tickets, your car can be impounded.

What if you get desperate and alter the expiration date on the temporary tag, so you can get to work without being pulled over, while you try to get your permanent plates?  The bill would make altering a temporary tag a new FELONY offense, punishable by hefty fines and imprisonment of 2-3 years.

One hapless consumer bought a car from a major franchised new car dealership in Southern California. The dealer failed to submit the registration forms.  As a result, the car buyer got so many tickets, his car was impounded. He paid off all the tickets. But he was still unable to get his car back because the dealer still failed to submit the proper documentation so it could be registered. Until it was registered, he couldn’t get it back. He eventually sued the dealer and according to his attorney, he won. But should you have to file a lawsuit just to get back your own car?

The bill number is AB 516, and the author is Assemblymember Kevin Mullin (D-Burlingame). The bill is backed by — surprise!! — car dealers. Plus toll authorities, who stand to increase toll collections by millions of dollars.

Mullin’s bill is opposed by civil rights and consumer groups, including the Lawyers Committee for Civil Rights of the Bay Area, California Rural Legal Assistance Foundation, and Consumers for Auto Reliability and Safety.

The Lawyers Committee for Civil Rights of the Bay Area writes:  “LLCR recently published, in collaboration with other groups, a report entitled Not Just a Ferguson Problem: How Traffic Courts Drive Inequality in California, which shows the many ways that low-income California drivers, and particularly communities of color, are impacted by unfair laws that result in license suspensions, and hefty fines, and that lead people into an endless cycle of debt and court involvement from which they cannot extricate themselves. Rather than reverse this trend, AB 516 would contribute to it.”

Adding insult to injury: the bill would raise the amount car dealers are allowed to charge car buyers as a “document fee” from $80 to $90.  If the bill passes, car buyers will  pay car dealers more, supposedly to handle the registration and spare them the hassle of dealing with the DMV. But guess what. The dealer still doesn’t have to get you the permanent plates in time for you to avoid being pulled over and ticketed. AHA. Catch-22.

Read more:

News report:  Car Dealers Making Yo-Yos out of CA Legislators

San Francisco Chronicle Editorial: License Plate Bill Needs a Quick Fix

The Daily Journal: Temp License Plate bill moves forward

Letters opposing this bill:

Lawyers Committee for Civil Rights of the Bay Area

California Rural Legal Assistance Foundation

Consumers for Auto Reliability and Safety

Law firm of Kemnitzer, Barron & Krieg

 

Car Dealers seek to legalize sales of unsafe recalled used cars

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Faced with record numbers of recalled cars and lengthy shortages of repair parts, car dealers are pushing aggressively to weaken state laws that prohibit them from deceiving their customers into buying used cars with lethal safety defects.

Car dealers are eager to foist the unsafe cars off onto their customers, knowing that there is no way they will be able to get the serious safety defects repaired, for months on end. In one horrific case, a father, mother, 13-year-old daughter and brother-in-law were all killed within hours after the dealer handed them the keys to an unsafe car. The publicity surrounding that case led to Toyota’s issuing a massive safety recall, and eventually paying a record fine. However, the dealers do not seem capable of learning from that tragic incident and its aftermath.

Federal law prohibits car dealers from selling recalled NEW cars to consumers until they have been repaired.  There is no similar, specific federal law that prohibits dealers from selling recalled USED cars to consumers. However, broader, more generic state laws in every state, and some federal laws, prohibit merchants, including car dealers, from engaging in fraud, false advertising, unfair and deceptive acts and practices, anti-competitive behavior, reckless endangerment, negligence, and other shady practices. In addition, a whole body of case law exists that prohibits such illicit conduct.

The National Highway Traffic Safety Administration has charged some dealers with violating the federal law against selling recalled new cars to consumers. What’s next? Dealers trying to make that legal too?

KPIX-TV, the CBS affiliate in San Francisco, broadcast this news report about the car dealers’ highly controversial, anti-consumer, anti-safety bill in California. Be sure to watch for the reaction at the end, by the news anchors:

KPIX-TV: Car dealers fight back over recall disclosures

 

 

 

New York’s Julie Menin: Tackling Predatory Car Lenders

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New York’s Commissioner of Consumer Affairs, Julie Menin, is determined to protect New Yorkers from predatory auto lending practices. Desperate used car buyers have been complaining to the agency, after they were cheated by unscrupulous car dealers who charged exorbitant interest rates for cars that often broke down soon after purchase, leaving them with ruined credit, deeper in debt, and without wheels.

According to the New York Times, auto loan debts sink many New Yorkers financially, averaging more than $12,000 — a burden that can prove impossible on an average annual income of just $36,000. Plus dealers commonly tack on high-priced add-ons that inflate the loans, without adding any value.

In response, the Department of Consumer Affairs is developing a “municipal auto loan initiative,” to allow troubled borrowers to get auto loans directly from a number of lenders on more consumer-friendly terms. This innovative approach promises to provide New Yorkers with lower-cost, less risky access to the cars they need to get to work.

The Department is insisting that interest rates on the loans be fixed, at 16% or less, and that any application fees may not exceed $25.

CARS wishes New York and its courageous pro-consumer Commissioner Julie Menin great success. We hope that this innovative new program thrives and helps lift up thousands of New Yorkers who would otherwise fall prey to dealers itching to exploit them.

Read more:

New York Times: New York City Starts Car Loan Program to Curb Abusive Practices

 

 

 

 

 

 

 

 

Buy a car – surrender your rights?

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One more reason not to buy a car from a car dealer:  when you do, they force you to give up your right to sue them if they cheat you.  So say good-bye to being able to take advantage of consumer protection laws.

Think a dealer wouldn’t dare roll back the odometer? Think again. They just slip a clause in your contract that says you can’t sue. Then when you find out your low-mileage car actually has over 100,000 extra miles that “disappeared” from the odometer — good luck trying to sue them under the Federal Odometer Act.

Car dealers used to face tough sanctions, including punitive damages, for ripping off consumers. But with rare exceptions, those days are gone.  That’s because car dealers insert “arbitration” clauses into their contracts. Then, after you’ve been shopping, test-driving cars, and negotiating for an average of 4 hours, they shove a stack of documents across a desk and tell you to “sign here, here and here.”

What they don’t tell you is that when you sign, you are giving up your rights under state and federal consumer protection laws. So forget hauling them before a judge or jury, who can throw the book at them. Instead, if you get any hearing at all, it’s before an “arbitrator” whose company just happens to be paid by — you guessed it — the dealer.

Under rulings by the Republican majority on the U.S. Supreme Court, this is perfectly legal.

Ironically, the dealers got a special exemption from Congress that allows them to sue anyone they please. They’re free to use the courts. But you can’t.

Evidence is mounting about how biased and unfair arbitration is. Check out this new report, issued by the Consumer Financial Protection Bureau. No wonder car dealers HATE this consumer watchdog agency. It shows how rigged the game is, when you buy a car from a dealer:

Consumer Financial Protection Bureau report

Don’t end up like Jon Perz, who has been waiting over 7 years for justice, after a car dealer in San Diego sold him an unsafe car.

YouTube Video of used car nightmare — over 1.3 million views

Be a smart shopper. Check out CARS’ car-buying tips for how to get a safe, reliable used car — without having the hassle or risk of buying from a dealer:

CARS Used Car Buying Tips

Happy, safe car shopping!

 

 

 

 

 

 

 

 

ABC 20/20 exposes CarMax’s sales of damaged cars and unsafe, recalled cars

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CarMax Admits It Sells Unsafe, Recalled Cars
So — how can a car that’s so unsafe pass their so-called  “rigorous 125+ point inspection”? No one seems to know…and CarMax refuses to go on camera…

From ABC NEWS RADIO:

” CarMax says it has transformed the used car buying experience with no haggling pricing and financing and its “125+ point” inspection process to make sure drivers don’t end up with a lemon. But consumer advocates say CarMax sales reps don’t always disclose the complete history and condition of the vehicles they sell.

A 20/20 investigation found instances on two CarMax lots where vehicles were being sold with reportedly significant accident histories or unrepaired safety recall issues….

When it came to outstanding safety recalls, the Hartford dealership salesman was recorded on hidden camera telling Benitez that CarMax is unable to sell a car with a major safety recall. “We can’t even sell it until that’s taken care of,” he said. “We take care of any kind of safety concern prior to the car even being out here.”

However, a check of a federal government website revealed that the Toyota Camry at the Hartford CarMax dealership had three outstanding safety recalls on it at the time of our visit, including one for a power switch that could overheat and melt, possibly resulting in a fire. Five other vehicles sitting on the lot also had unfixed safety recalls, according to the government website.

CarMax declined an interview but told 20/20 in a statement that it doesn’t automatically fix recall vehicles before selling them and only does so if a customer requests it. CarMax says it does inform consumers about any open recalls and recently upgraded its website so customers can look up open recalls online through the government database. CarMax also says it retrained its staff on its recall policy.

A coalition of consumer and safety groups filed a petition with the Federal Trade Commission this June, urging the agency to investigate CarMax’s safety recall policy. Rosemary Shahan, head of Consumers for Auto Reliability and Safety (CARS), is calling on the FTC to require CarMax to have all safety recall vehicles repaired before selling them to consumers. “CarMax sells vehicles that are under safety recall without bothering to fix them,” said Shahan. “If they wanted to do it right, it would be very easy for them to do it right.” (Emphasis added)

Read more: ABC 20/20:  What Do Some CarMax Sales Reps Tell  Consumers?

One more reason NOT to buy a car from a car dealer

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Even the auto dealers themselves have to admit:  many car buyers dread buying cars from auto dealers. Young people are especially wary.  And for good reason.

Car dealers keep selling unsafe, recalled used cars to consumers, putting them, their friends and family, and other motorists at risk of death or serious, debilitating injuries.

And as if that weren’t bad enough, they also insist that you surrender your Constitutional rights as part of the price of buying a car from them.

Good luck trying to buy a car from a dealer without a “gotcha” clause hidden in the contract that says you give up your Constitutional right to take them to court, and benefit from  our nation’s hard-won consumer protection laws. Like laws against rolling back odometers, selling “junk” cars that are advertised as being “in mint condition,” or engaging in other forms of cheating, lying, fraud, and thievery.

And get this:  the dealers got a special exemption from Congress — just for car dealers —  that allows them to keep THEIR Constitutional rights. So they can take anyone they want to court, and use the laws that benefit THEM. But they killed a bill that would have protected YOU from losing your rights when you sign on the dotted line to buy a car from them.

If you’re fed up with car dealers and their scams, check this out:

Cleveland Plain Dealer: Arbitration: What you don’t know about fine print can hurt you

And let your local car dealers know you’re not buying from them until they clean up their act, and you don’t have to surrender your rights to buy a car from them.