Tag Archives: car dealers

Yes, it IS illegal for car dealers to sell used cars with unrepaired safety recall defects.

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Contrary to the spin from unscrupulous car dealers, and erroneous reports in the news, it is illegal for car dealers to sell dangerous used cars with unrepaired safety recalls. Injured or misled consumers or their surviving family members who sue dealers that engage in such reckless practices usually win confidential settlements. The dealers insist on confidentiality to cover up their illegal activity. The legal settlements are a telltale sign that the dealers know perfectly well what they are doing is illegal.

So if you discover that a crooked car dealer sold you an unrepaired recalled used car, you should get expert legal advice and fight back.

Here’s the scoop: There is a FEDERAL law against car dealers selling recalled NEW cars. There is also a FEDERAL law that prohibits rental car companies with fleets of 35 or more vehicles from renting or selling recalled rental cars, which are legally considered USED vehicles. That is because they were purchased by the rental car companies, making them USED. While there is still no specific FEDERAL law against other car dealers selling recalled USED cars, if they do, they risk being held accountable under various STATE laws.

No less an authority than the U.S. Federal Trade Commission has noted:

“…state product safety, tort, and other consumer protection laws, provide important safeguards to consumers affected by defective cars.”

An attorney who advises auto dealers has also warned them that if they sell used recalled cars, they face serious sanctions under state laws. According to a report in Automotive News:“There are theories of liability that plaintiff attorneys may attempt to attach to these vehicles, even if dealers are using good-faith efforts to identify potential open recalls,” says Shawn Mercer, a partner at Bass Sox Mercer, a Tallahassee, Fla., law firm that specializes in dealership franchise law… “depending on the jurisdiction,” Mercer says, “potential liability can stem from violations of state laws or common law tort claims.”  (Emphasis added)

The article also cautions car dealers:

“Selling a vehicle with an undisclosed safety problem makes for dissatisfied customers and can have legal repercussions, even if the dealership was unaware of the recall.” (Emphasis added)

One legal case that stands out, making the point that state law prohibits dealers and other businesses from failing to exercise due care, or acting with negligence, is Houck vs. Enterprise.  Sisters Raechel and Jacqueline Houck were ages 20 and 24 when they visited their parents in Ojai, California.  On their way back home to Santa Cruz, they were killed by an unrepaired recalled rental car — a Chrysler PT Cruiser that caught on fire, and also lost steering. They ended up colliding with an 18-wheeler semi-trailer truck and perished in the crash.

Their heartbroken, grieving parents sued Chrysler and Enterprise under state laws, for failing to exercise the common law duty of care, and for negligence, resulting in wrongful death.  Eventually, on the eve of trial, Enterprise admitted 100% liability — under state laws.  A jury awarded the Houcks $15 million in compensatory damages.

Years later, the President of the California New Car Dealers Association made the false claim that it wasn’t illegal for dealers to sell unrepaired recalled used cars. The Houcks’ attorneys wrote a scathing letter pointing out that violating state civil laws is illegal. The attorneys cited the unanimous jury decision in the Houcks’ favor, and also cited state laws against negligence and common law torts.

CARS worked closely with Cally Houck, Raechel and Jacqueline’s mother, to get a new federal law enacted to prohibit rental car companies or car dealers from renting, loaning, or selling unrepaired recalled cars. The battle lasted for years, with auto manufacturers and dealers actively opposing the bill, even after the rental car industry had dropped its opposition.  But eventually we won.

That victory means that not only do rental car companies remain liable under state laws, but they also face enforcement by the National Highway Traffic Safety Administration (NHTSA), the nation’s premier auto safety agency.

Thanks to the passage of the Raechel and Jacqueline Houck Safe Rental Car Act, NHTSA now has the authority to issue fines or take other action if a rental car company violates the law — even if no one is injured or killed as a result.  Thus, the Act saves lives and prevents more tragedies from happening.

CARS supports the ongoing efforts of Senators Blumenthal and Markey, and U.S. Representative Jan Schakowsky, to enact federal legislation to make it a violation of federal law, enforceable by NHTSA, for car dealers to sell unrepaired recalled used cars.

Meanwhile, victims of crooked dealers who play “recalled used car roulette” with their customers’ lives, should get legal advice and fight back, using existing state laws. It’s also important for state attorneys general to enforce the existing state laws against fraud, violations of express and implied warranties, and other provisions of law.

CARS applauds the District Attorney in Sedgwick County Kansas — one of the few law enforcement officials in the nation who is standing up to the powerful car dealer lobby in order to protect car buyers and others who share the roads.

Read More: The Wichita Eagle:  Wichita car lot hit with $140,000 fine over business practices

Hazardous Hurricane Ian Flood Cars For Sale

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We all saw the images of the devastation caused by Hurricane Ian, including vehicles floating in flood waters. It’s estimated that over 358,000 vehicles were submerged – many of them in highly corrosive salt water.

Live far away from Florida? You may think you don’t have to worry about flood cars from Hurricane Ian showing up near you. But flood cars are often shipped to auctions in other states and end up all over the map. Many will be resold in Florida, Georgia, Alabama, Mississippi, and the Carolinas. But others will be shipped to far-flung states. Flood car crooks target certain states because they have large car markets and can command higher prices. Like California, New York and Texas. Plus consumers there may not be on the lookout for flood cars, making them easy prey for scamsters.

New Cars Get Flooded Too

Even if you’re in the market for a new car, it’s important to be on high alert.

That’s because it’s not only used cars that get flooded. New cars that were submerged while parked on car lots at large, franchised new car dealerships are also declared a total loss. But that’s not the end of the road for those “brand new” cars, SUVs, and trucks. Instead of being crushed, water-logged cars are towed away and parked in row after row, covering acres of vacant land. They sit there with the sun beating down on them, causing mold, bacteria, and mildew to grow. Some are still festooned with seaweed and slathered in grime and slime.

Then they’re shipped to auction companies like Copart and Insurance Auto Auctions (IAA) that have ties to auto insurers. Copart and IAA brazenly trumpet the fact they have flood-damaged cars available. For example, on October 18, IAA offered 9,968 “Hurricane Ian” vehicles for sale. They sell them to the highest bidders, who can bid online. The buyers may be from distant states, or even other countries.

Unscrupulous characters buy flood cars at a discount, spiff them up, attempt to mask the musty odors, and quickly resell them. Car dealers are eager to snap them up. Then they sell them for top dollar, without any discount. That way, they not only make a fatter profit, they also are less likely to arouse suspicion that something’s wrong. If the car is marked down, buyers are more likely to be wary. In other words, the “normal” pricing is part of the deception.

Some car dealers sell severely damaged or flood cars as so-called “certified” vehicles, advertising that they passed a rigorous inspection and charging hefty markups. The bottom line: don’t trust any seller, whether they’re an individual or a car dealer. Check out the car yourself, before you buy.

Why avoid flood cars?

FLOOD CARS ARE UNSAFE

Flood cars are hazardous. Today’s cars are basically computers on wheels. All the sophisticated safety systems, including the braking, steering, stability control, and navigation features, are controlled by electronics and by millions of lines of computer code. Imagine dropping your personal computer into the ocean, and letting it soak. After it gets a dousing in salt water, even if you were able to start it up, the sensitive electronics are doomed to corrode.

FLOOD CARS ARE UNHEALTHY

Flood cars are harmful to your health. Besides being unsafe to drive, flood cars are hopelessly contaminated with spores, mold, bacteria, and various toxins. They’re prone to causing serious health problems, particularly for people with asthma, allergies, and compromised immune systems. Even if they’ve been cleaned up cosmetically and sprayed to mask the odors, they are basically rotting from the inside out.

FLOOD CARS ARE UNAFFORDABLE

Flood cars are inevitably going to have massive, expensive problems that defy repair. Worse, even if you pay extra to get a new or “nearly new” car with a warranty from the manufacturer, that warranty will be deemed to be void. Some consumers have found this out the hard way, paying top dollar for “new” vehicles that were submerged in a flood. They immediately experienced major problems. Then they were shocked and dismayed when the manufacturer refused to honor the warranty, citing the fact the car had been flooded and declared a total loss.

Extended service contracts are also void. Typically, service contracts exclude “pre-existing conditions” such as being wrecked or flooded. So you could end up paying a lot more for the coverage, but be unable to use it to cover expensive repairs.

If you try to resell the car, dealers or other consumers will most likely offer you far less than you paid, or still owe to a lender. Or they may flat-out refuse to buy it. Worst case scenario – you could get stuck with an expensive, unsafe lemon car you can’t drive, can’t fix, and can’t sell.

How to avoid flood cars

Don’t expect to find a mackerel on the manifold or a trout in the trunk. Scamsters are too smart for that. They scrub and clean the cars, spiffing them up cosmetically. They may remove the floor mats and even replace some of the upholstery. They spray cans of deodorizers in the interiors, to disguise unpleasant smells. So at first glance, the cars may appear pristine. But behind that appealing facade, they’re rotting from the inside out. So be sure to look deeper. The time to do this is BEFORE you agree to buy.

Here are steps you can take to stay safe and avoid hazardous flood cars and also steer clear of cars with deadly safety recall defects. To save you time and money, the easiest, least expensive steps are first. That way, you can eliminate the worst lemons before you spend more time or hard-earned dollars.

Step 1: Get the Vehicle Identification Number, or VIN. This is a unique number, usually 17 digits. It’s like the vehicle’s fingerprint. The VIN unlocks a treasure trove of information about a car’s past. Typically, the VIN is stamped on a small metal plate on the dashboard. It’s usually also on a sticker inside the driver door jamb, on the title, and on sales documents. It may also be displayed in ads.

Check FREE database of unsafe vehicles with deadly safety recall defects

Step 2: Enter the vehicle’s VIN at the website for the National Highway Traffic Safety Administration, here. This is quick, easy, and free. Auto manufacturers are required to provide information about deadly safety recall defects to this government website. If the vehicle has an unrepaired safety recall defect, it’s too risky to buy, even if it wasn’t flooded. When you check here first, you can save yourself from paying anything or taking any more time to look further.

Warning: The way auto manufacturers describe defects in their recall notices may make it seem like the defects are not a serious threat. But that can be deceiving. For example, a recall due to “floor mats” caused the tragic deaths of four members of a family in San Diego who were on their way to a soccer game when the defect caused the accelerator pedal to stick. BMW describes one recall defect as causing a “thermal event.” Translation: the car is prone to catching on fire, and bursting into flames.

Next: IF the vehicle passes the safety recall test

Step 3: Enter the VIN at the National Motor Vehicle Title Information System, or NMVTIS. This database of total loss vehicles is operated by the U.S. Department of Justice. All the U.S. states, except for Hawaii, participate and share data with NMVTIS. This is the best place to search next, specifically for total loss flood cars.

Consumers for Auto Reliability and Safety sued the U.S. DOJ and won, compelling the DOJ to issue federal rules that require each of these businesses, in all 50 states, to report every vehicle under 5 model years old that they declare a total loss to NMVTIS, within 30 days (many report daily):

▪ Auto insurers
▪ Self-insured entities, including large auto dealership chains and rental car companies
▪ Salvage pools and salvage auctions, such as Copart and Insurance Auto Auctions
▪ Junkyards
▪ Auto recyclers
▪ Scrap vehicle shredders
▪ Scrap metal processors
▪ Vehicle remarketers

NMVTIS is the only database where insurers must report vehicles they declare a total loss, within 30 days, in order to comply with federal law. When it comes to total loss vehicles, NMVTIS tends to be more up-to-date and complete than other databases, and often captures total loss vehicles that other databases miss. That’s largely because totaled vehicles must be reported to NMVTIS – even if they are not considered a total loss under relatively weak state laws, which frequently allow hazardous totaled vehicles to go undetected.

The DOJ has approved over a dozen NMVTIS data providers who charge a small amount (usually less than $10) to access NMVTIS’ total loss data. This is less expensive than Carfax or Autocheck. So check here first. If the vehicle shows up in NMVTIS because it was a total loss, play it safe and reject it.

NMVTIS is a very valuable resource, but it has limits. What’s not necessarily included in NMVTIS?

▪ Older vehicles, 5 model years or older – they are not required to be reported, although some businesses report older vehicles voluntarily
▪ Vehicles that are severely damaged, but not declared a total loss

Plus – sometimes major companies violate federal law and fail to report total loss vehicles to NMVTIS. So even if a vehicle doesn’t show up in NMVTIS, it’s not necessarily a clean bill of health. It’s still really important to take the next steps and get a car that passes the “NMVTIS test” inspected by a trustworthy automotive expert you choose yourself, and also check out the car yourself, in person.

Next: Visual inspection and test drive

Step 4: Look carefully for tell-tale signs of flood damage, including:

• Silt or other residue in odd places, like under the floor mats, in crevices, in the trunk, and inside the wheel well
• Rust or signs of corrosion
• Fogging inside headlamps or taillights
• Water lines in the passenger cabin, engine compartment, or trunk
• Musty smell, particularly when you turn on the air conditioning or heat
• Heavy scents from air fresheners or cleaning solutions
• Mold or mildew
• Used cars with brand-new upholstery
• Stalling, difficulty starting, electrical glitches, or other driveability issues that act up during a test drive
• Warning lights that illuminate on the dashboard

Other tell-tale signs:

• Title document stamped with a “brand” that indicates the vehicle was “salvage,” “junk” “rebuildable,” “water/flood” “rebuilt” “water-damaged” or simply “flood”
• Seller who refuses to show you the vehicle’s title prior to sale, making lame excuses for not letting you look it over carefully before you buy
• Signs the title was altered. Some crooks use white-out to cover up the “flood” brand or literally punch holes in the title to remove the brand, using a hole punch
• Vehicles with titles from Florida or other states hit hard by Hurricane Ian

Step 5: IF the car passes all of those tests, then the last step is to get it inspected by a trustworthy automotive technician you choose and pay for yourself. Do NOT rely on the seller to give you an honest inspection report. Many dealers advertise they only sell cars that pass their “150 point” or “172 point” inspection. This is designed to keep you from getting your own inspection done.

But they fail to fix deadly safety recall defects, and may also lie about flood damage. They count on the fact that most of their victims won’t bother to sue, and if they do, they can force them to submit to arbitration – a rigged system paid for by car dealers where victims almost always lose.

Here’s a good resource for finding a trustworthy, qualified automotive technician, based on ratings provided by other car buyers and vehicle owners: Mechanics Files

Usually, it costs about $100 for a thorough inspection. Look for auto techs who have been in business a long time and consistently receive top ratings. Ideally, they should be expert in repairing and inspecting the same brand / make that you are interested in buying. That way, they may also be able to tell you about problems you can expect that are common to that particular vehicle, and how much it would cost to fix them. Ask the technician if they would be willing to work with you and the seller to inspect the car where it’s located, using diagnostic tools that are portable. Unless they have something to hide, the seller should be willing to cooperate with you to get the inspection done.

More tips for avoiding flood car headaches:

Beware of “title washing.”

Crooked car dealers and others who traffic in flood cars sometimes engage in an illegal practice known as “title washing” to make it easier to sell severely damaged vehicles to unsuspecting car buyers. The crooks exploit loopholes in state laws to obtain supposedly “clean” titles, erasing title brands such as “salvage” or “flood.”

NMVTIS makes it more difficult for crooks to get away with laundering car titles across state lines. But it still happens.

Some states have a reputation for being title-washing states. Sleazy car dealers send titles with a “flood” brand to one of those states and within weeks, they obtain clean titles. Presto! Now they can advertise those dangerous cars as having “clean” or “clear” titles, show prospective buyers a “clean” title, and charge top dollar. The cars may never actually leave Florida, but now they have new, “clean” titles from another state.

For example, the office of Pennsylvania Attorney General Josh Shapiro cracked down on a title washing fraud ring that allegedly involved car dealers and companies in multiple states.

What about vehicle history reports from Carfax or Autocheck?

Sometimes obtaining a vehicle history report from Carfax or Autocheck can tell you more useful information about the vehicle’s history. For example, Carfax may have information about odometer readings, prior repairs, airbag deployments, and safety recalls, and may also show when a vehicle was sold before. In general, the more you find out about a vehicle’s history, the better. But….

Warning!

Carfax and Autocheck are notorious among auto fraud experts for being unreliable. Both databases tend to have a lot of holes. Many consumers complain they were shown a “clean” Carfax when they bought their car, then found out about a prior wreck or flood damage that didn’t show up until after it was too late.

Plus Carfax and Autocheck slip disclaimers into the fine print, aimed at taking away your rights. Their “buyback guarantees” are extremely difficult to enforce.

Bottom line: Vehicle history reports are definitely NOT a substitute for a personal inspection and an inspection by a trustworthy automotive expert you choose yourself.

What if you already bought a flood car?

If you find out that someone already sold you a flood car, get advice from an experienced auto fraud attorney. Even if it was sold “AS IS,” you may have protection under your state’s consumer protection laws, such as laws against committing fraud, engaging in unfair or deceptive acts or practices, or violating an implied warranty. The way the vehicle was advertised and what you were led to believe about the vehicle’s condition when you were shopping may be major factors in whether you have a good case. The website for the National Association of Consumer Advocates is a good resource for finding an auto fraud expert in your state.

Crooked car dealers and lenders are illegally repossessing cars

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As if it wasn’t bad enough that car dealers are exploiting new and used car buyers by engaging in price-gouging during a pandemic.  Making their customers’ lives even worse, some dealers and lenders are also illegally repossessing their cars. That’s so they can resell them and make another killing by exploiting someone else.

But the pro-consumer folks that President Biden appointed to head up the Consumer Financial Protection Bureau have noticed. They just announced they’re cracking down on illegal auto repossessions. Some of the practices they identified are:

  • “Illegally seizing cars: Servicers are repossessing vehicles from borrowers who made payments sufficient to stop the repossession or who entered a payment plan. Given the high level of harm caused by wrongful repossessions, servicers must ensure that every single repossession is valid.
  • Sloppy record keeping: Incorrectly coded records or agents failing to talk to their colleagues about canceling repossession orders hurts consumers and is a violation of federal law. Servicers need to ensure proper communication between them and any third-party processing a repossession.
  • Unreliable balance inquiries: Inaccurate balances can lead to a borrower paying less than a sufficient amount to avoid delinquency, resulting in a repossession. People are also having their vehicles repossessed because their loan payments are processed in a different order than what they had been told.
  • Ransom for personal property: Servicers are still holding personal property found in repossessed vehicles hostage until the property owner pays a fee, a practice the CFPB has been cracking down on for years.”

Read more:  CFPB Moves to Thwart Illegal Auto Repossessions

What can you do if a dealer or lender repossesses your car, SUV, or truck, and you suspect it’s illegal?

Complain to the CFPB. Here’s where you can file a complaint: Submit a complaint

Get legal advice from an attorney who specializes in representing victims of auto fraud. Be sure to ask if they are willing to represent you on a “contingency” basis, or at no cost to you. Here’s a good resource for finding an auto fraud expert in your state, by contacting the National Association of Consumer Advocates.

How can you avoid becoming a victim of an illegal repossession?

#1 Join a local credit union and get pre-approved for a loan BEFORE you shop for a car.  Most credit unions are not as crooked as the big auto lenders tend to be.

If you can defer buying a car, save up and pay cash.

Consider buying your car from another consumer, instead of a car dealer. That way, you can save a LOT of $$ and also avoid a lot of hassles, like having your car basically stolen and your personal property held hostage.

Here are CARS’ tips for how to get a good deal on a nice, safe, reliable used car — while telling crooked dealers and lenders “Bye-Bye”!!

Popular video about this auto lending scam: Comedian and news commentator John Oliver reveals how car dealers and lenders engage in “churning” — buying overpriced cars that often break down soon after purchase, repossess them, and resell them again and again, making a huge profit each time. At the expense of honest, hard-working car buyers.

Car dealer greed fuels inflation

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If you’re shopping for a new car, or a used car, you already know what the experts are saying. Car prices are soaring. For new vehicles, greedy car dealers are demanding $10,000, $20,000 or more over the manufacturers’ retail sticker price, which is usually already inflated by the manufacturers.

Car dealers are also price-gouging consumers over the price of used vehicles, and routinely selling them dangerous unrepaired recalled used vehicles without bothering to get the safety recall repairs done first — even though federal law requires auto manufacturers to provide safety recall repairs for free, for at least 15 years from when the recall is issued.

Car dealers often downplay the risks posed by safety recall defects. Don’t fall for it. Your life is precious, and if you’re paying top dollar to a professionally licensed car dealer, you deserve to get a car that is at least free from deadly defects, like brakes that fail, catching on fire, steering wheels that come off in the driver’s hands, sticking accelerator pedals, and faulty airbags that propel shrapnel into the passenger cabin, causing severe or fatal injuries such as blindness, or bleeding to death.

Car dealers are bragging in the automotive press about how their profits are also going through the roof. Billionaire investors like Bill Gates and Melinda French Gates — who are heavily invested in the AutoNation dealership chain, and Warren Buffett, whose Berkshire Hathaway conglomerate owns multiple car dealerships outright — are making vast profits by ripping off new and used car buyers, selling unsafe vehicles, and exploiting the computer chip shortage.

Some states have laws against price-gouging, but don’t hold your breath waiting for your state’s attorney general to protect you. Car dealers are so politically active and well-connected, they hardly ever get sued by public law enforcement agencies, no matter how blatantly they violate the law.

So what can you do to avoid falling prey to greedy car dealers?  Many car buyers are purchasing vehicles from other consumers, who don’t have to pay for advertising, overhead, and glittering, impressive structures. or attract investment capital.  Other consumers also don’t impose forced arbitration clauses on car buyers — unlike car dealers, who typically refuse to sell you a car unless you first surrender your Constitutional right to fight back in court, if they violate the law by committing fraud, rolling back odometers, falsifying loan applications, selling unsafe junkers or flood cars, selling cars that they don’t even own, or engaging in other crooked practices.

You can save a LOT of money by buying a car from another consumer, instead of being ripped off by a greedy car dealer. But you still have to be careful. Some con artists pose as private sellers, when in fact they are unlicensed dealers. They may tell you that they’re selling their own car, or their cousin’s car, when in reality that got that potential deathtrap on wheels from an auto auction, after it was rejected by another consumer and other dealers decided they didn’t want it on their car lot.

Here are tips from experts about how to get a good deal on a safe, reliable used vehicle, by taking control of the transaction yourself and buying from another car owner. This step-by-step process takes some time, but it can save you tons of $$  — and potentially save your life, and the lives of those you love.

Wishing you and your family safe, happy motoring, and freedom from price-gouging, inflation-fueling greedy car dealers!

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!!!!!

FTC: Car dealer ripped off consumers in Arizona and New Mexico– many members of the Navajo Nation

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The FTC announced today that the agency has” reached an agreement with Richard Berry, the owner and manager of a group of bankrupt auto dealerships in Arizona and New Mexico, to resolve charges that he and the dealerships deceived consumers and falsified information on vehicle financing applications. Many of the affected consumers were members of the Navajo Nation.”

According to Samuel Levine, Acting Director of the FTC’s Bureau of Consumer Protection, “When Berry’s auto dealerships falsified income and down payment information to qualify people for loans they couldn’t afford to pay back, they set people up for failure – including default, repossession, and ruined credit. That’s why the FTC sued Berry and his dealerships.”

In a news release, the FTC stated the following:

The FTC reached an earlier settlement with the four dealerships: Tate’s Auto Center of Winslow, Tate’s Automotive, Tate Ford-Lincoln-Mercury, and Tate’s Auto Center of Gallup. If approved by the district court, the present settlement against Berry, would result in a $450,000 payment to the FTC and conclude the FTC’s case.

The FTC’s complaint, filed in August 2018, alleged that the defendants falsified consumers’ income and down payment information to get vehicles financed and engaged in unlawful advertising. In an earlier ruling in the case, the judge found that the defendants violated the Truth in Lending Act (TILA) and Consumer Leasing Act (CLA) by failing to disclose legally required information in their advertisements.

In addition to the $450,000 payment, the proposed settlement prohibits Berry from misrepresenting information in documents associated with a consumer’s purchase, financing, or leasing of a motor vehicle, and misrepresenting the costs or any other material fact related to vehicle financing. The proposed order also requires Berry to provide consumers sufficient time to review and obtain a copy of the relevant vehicle financing documents and prohibits him from violating the TILA and CLA.”

Unfortunately, this is not an isolated case. Car dealers are notorious for targeting people of color — including indigenous Americans, recent immigrants, and others they consider vulnerable — and cheating them, causing severe hardship and sometimes homelessness when their victims lose their only means of transportation to work / schooling / child care / medical care.

How can you avoid falling prey to a predatory auto dealer?  Don’t even go there. Here are CARS’ tips for how to navigate the private market, and avoid the headaches and heartaches of buying at a “stealership.”

Federal Trade Commission provides over $1 million in refunds to victims of Bronx Honda harmed by allegedly illegal and discriminatory practices

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According to the Federal Trade Commission, the agency is “sending refunds totaling nearly $1.5 million to individuals who were affected by allegedly unlawful financing and sales practices by Bronx Honda.

According to the FTC, Bronx Honda and its general manager told sales employees to charge higher financing markups and fees to African-American and Hispanic customers. The defendants told employees that these groups should be targeted due to their limited education, and not to attempt the same practices with non-Hispanic white consumers.

The FTC further alleged that Bronx Honda failed to honor advertised sale prices, changed the sales price on paperwork in the middle of the sale without telling the consumer, double-charged consumers for taxes and fees, and misrepresented to consumers that they were required to pay extra reconditioning and warranty fees to purchase ‘certified’ vehicles.

The FTC is providing refunds, averaging about $371 each, to 3,977 victims of Bronx Honda’s practices. Those who receive checks should deposit or cash their checks within 60 days, as indicated on the check. The FTC never requires people to pay money or provide account information to cash a refund check.

Recipients who have questions about the refunds, or consumers who financed a car purchase from Bronx Honda in 2016 through 2018 and have not previously requested a refund, should contact JND Legal Administration at 888-921-0727.”

Unfortunately, such practices are all too common at auto dealerships across the nation. How can you avoid giving your business to a crooked car dealer who is ripping people off, based on their race?

If you’re looking for a new car, your options are extremely limited. That’s because corrupt legislators have granted car dealers a special monopoly on new car sales, insulating them from competition and drastically increasing prices and harmful practices. Just about the only exception is Tesla, and car dealers have been battling against Tesla for years, in many states, to keep them from being allowed to sell new vehicles without car dealers getting to make a killing.

“Adam Ruins Everything” slams the car dealer monopoly in  “The real reason car dealerships are the worst” — viewed over 7 million times on YouTube.

But if you are looking for a used car, you have the choice of buying a car directly from another consumer, eliminating the middleman, saving money, and reducing the risk of being cheated by a professional crook.

You still need to be careful, but if you do your research, find your own financing in advance, and insist on a thorough inspection, you can get a great deal on a safe, reliable used car. Check out CARS’ tips on how to avoid car dealers’ tricks and traps.

NEVER trust a car dealer to make sure a car is safe.

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When you shop at a car dealership, you shouldn’t have to worry that they’re deliberately selling you a deathtrap. But that’s what many unscrupulous new and used car dealers all over America are doing.

Car dealers keep getting caught selling vehicles with deadly safety recall defects, like faulty brakes, loss of steering, catching on fire, sticking accelerator pedals, and exploding Takata airbags that shoot metal shrapnel into the passenger compartment, causing drivers and passengers to lose their eyesight, suffer brain damage, or bleed to death.

Car dealers coast-to-coast are exploiting the widespread misconception that if you shop at a dealership, they must have gotten any deadly safety defects fixed. Otherwise, why pay extra, if the car is no safer than if you bought it from a stranger who posted it on Craig’s List?

Even highly sophisticated consumers, including Members of Congress and reporters who cover the automotive industry, suffer from this mistaken belief that somehow vehicles are safer if they’re on a car dealer’s lot.

That erroneous belief tends to be even stronger when the dealer claims the vehicle was thoroughly inspected, and when the dealer is a major franchised dealership.

U.S. Rep. MarkWayn Mullin, of Oklahoma, a GOP Member of Congress, stated at a Congressional hearing on auto safety that “I understand the responsibility of the driver. But at the same time, if you buy a vehicle new or used, you assume everything’s perfect on it.”

The former Administrator of the National Highway Traffic Safety Administration, Dr. Mark Rosekind, who was testifying at the hearing on behalf of the Obama Administration, agreed.

Recently, Automotive News reporter Richard Truett wrote:

“For me, there’s a certain trust the comes with buying a used car from a franchised new-car dealer. I feel I’m not going to get an unsafe car. And it’s worth paying a small premium to know that the vehicle has been inspected and that technicians examined the critical items. Most techs, I believe, would not let a used vehicle go out for sale if they wouldn’t put their own family in it.”

Sadly, that trust is terribly misplaced. As many news organizations have reported, and the CARS Foundation and our research partners at U.S.PIRG and the Frontier Group have repeatedly found, both new car dealers and used car dealers routinely fail to get deadly safety recall defects repaired, even though the repairs are free.

A car dealer in Hartford, Connecticut sold a young African-American man who was buying his first car a 2011 Hyundai Sonata SE with an appalling 11 unrepaired safety recalls. The safety defects included: faulty airbags, bad brakes, stalling in traffic, and other life-threatening defects. He fought back and won a favorable decision in arbitration, including a refund and his attorneys fees.

More reports about car dealers who sell unrepaired recalled cars with deadly safety recall defects:

‘It’s Recalled Car Roulette’: Some Used Cars Sold With Unrepaired Safety Recalls

Click here to see CARS’ tips for how to get a good deal on a safe used car without having to deal with professional crooks who put their short-term profits ahead of your safety, and the safety of your family and friends.

New York Honda dealership penalized over discriminatory practices

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Car dealers and lenders keep getting caught engaging in discriminatory practices, cheating consumers based on race, particularly harming car buyers who are African American and Latino.

It’s illegal, but many auto dealers persist in targeting people of color, selling them overpriced junkers and charging them extra for worthless add-ons and sky-high interest rates.

One of the more blatant examples: According to the Federal Trade Commission, “Bronx Honda told their employees to charge African-American and Latino people higher interest rates and fees when they applied for dealer financing.” The agency also said that the dealership paid their employees bonuses for ripping off people of color. The worse the terms, the higher the bonuses.

“People who were shopping for a Certified Pre-Owned Honda were also told that ‘certification’ and other fees (which often added up to $3000) were required. Despite the fact that the cars were Certified Pre-Owned before they arrived on the sales floor.”

The FTC also alleged the dealership often added additional “fees,” in the form of a higher total sales price or monthly installments, without telling the buyers. This scam is very popular among auto dealers, who exploit “e-contracting” to conceal the predatory prices from their victims.

Sometimes, consumers never even see what is on the computer screen. They don’t know what the real cost is until it’s too late.  CARS heard from one consumer who bought a new car from a dealership in Vallejo, California, who was repeatedly promised it would cost $24,000. But when the contract was printed out, with his “e-signature” on it, the price was over $48,000 — more than double what the dealer had promised.

How can you avoid paying too much for your next car? Here are CARS’ tips for car buyers, showing step by step how to get a good deal on a safe, reliable used car without having to buy from a professional, racist crook.

FTC News release: NYC Car Dealer Accused of Discriminatory Lending

Auto dealerships re-open – but is shopping there safe?

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Buying cars at auto dealerships has always been risky.  But especially now, when you may be exposed to Covid-19, the risks are even greater. Plus Covid-19 isn’t the only health and safety risk you face if you shop at a car dealership.

Many auto dealers don’t care enough about their customers’ safety to take the simple step of ensuring that FREE safety recall repairs are done to fix deadly safety recall defects.

Auto dealers neglect to get free repairs done to fix killer defects like:

  • bad brakes
  • steering wheels that literally come off in the driver’s hands
  • exploding Takata airbags that are like having a hand grenade go off in your face, causing blindness or bleeding to death
  • catching on fire
  • sticking accelerator pedals

So can you trust auto dealers to protect you from Coronavirus?  Obviously, the answer is NO.

Even huge auto dealership chains like CarMax and AutoNation sell hazardous vehicles with safety defects that have killed hundreds of people and seriously injured thousands more.

They spend millions in advertising to lure car buyers to their stores, trumpeting that vehicles they offer for sale must pass an “inspection.” They list over 100 components that are supposedly inspected. But don’t be fooled. They routinely fail to fix components with serious safety recall defects that are likely to kill you or someone you love.

CarMax is the largest retailer of used cars in the U.S.  They raked in over $18 billion in revenue last year, and are publicly traded on Wall Street.

CarMax used to hire employees and task them with delivering recalled cars to nearby new car dealerships for free repairs.  New car dealers liked to get the work. Auto manufacturers compensate their franchised dealers for performing safety recall repairs, so it’s a money-maker for them.

But then CarMax decided they could make more money by lowballing consumers who traded in recalled vehicles, then selling them rapid-fire for high retail as “CarMax Quality Certified” vehicles without waiting for the free repairs.

AutoNation is also publicly traded on Wall Street and boasts they are a Fortune 500 company with over $21 billion in revenue. Their largest investors include the trust controlled by the Bill and Melinda Gates Foundation.

At first, AutoNation announced they would guarantee that all their vehicles were recall-free.  But when Trump was elected, faced with competitive pressure from CarMax for investor dollars, they gave up and started selling dangerous recalled vehicles too.

The kicker: If you are injured or killed, or harm someone else because of an unrepaired safety recall defect, the dealers will blame YOU for buying a dangerous car from them.

Learn more:

CBS News:CarMax Accused of Selling Unsafe Vehicles

CBS This Morning: AutoNation Accused of Selling Recalled Cars

CARS tips: How to get a good deal on a nice, safe used car without the risks of buying from a dealer

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”

Are car dealers exposing people to coronavirus?

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Many car dealers engage in reckless practices that put lives at risk. Like selling new or used vehicles without bothering to get the FREE safety recall defects fixed first. Tragically, some people have been seriously injured or killed by car dealers who sold them cars, trucks, or SUVs with deadly defects.

So it’s only reasonable to ask: Are auto dealers also exposing car buyers and their families to the coronavirus? Some car dealers are attempting to reassure prospective car buyers, who are understandably concerned about the coronavirus pandemic, not to worry. For example, AutoNation claims on Twitter that it ” can service and then sanitize your vehicle with Clorox® Total 360®.” The use of the term “sanitize” implies that there’s nothing to worry about.

But how can anyone trust AutoNation, when their then-CEO told the whole world — right after Pres. Trump was elected — they were going to rev up their sales of seriously defective recalled used cars? Especially vehicles where there are no replacement parts available, so if you buy one of their “cream puffs,” there’s no way you can get it fixed, for weeks or months. Meanwhile, you are left to ride around in a potential deathtrap.

Last fall, Researchers found that more than 1 in 9 vehicles AutoNation was offering for sale at various stores across the nation had at least one unrepaired safety recall defect. Like faulty brakes, catching on fire, loss of steering, accelerator pedals that stick, stalling in traffic, hoods that fly up and obscure the driver’s vision, and many vehicles with ticking time bomb Takata airbags that explode like having a hand grenade go off in your car, causing devastating injuries such as blindness or bleeding to death.

If a huge car dealership chain that rakes in billions of dollars a year, is a Fortune 500 company, and touts Bill Gates as its biggest investor, will stoop to deliberately selling vehicles that grossly defective and unsafe, can you trust them to protect you from an unseen threat like coronavirus? Do you want to bet your life on it?