CAR BUYING SCAMS AND DEALERSHIP FRAUD
There are a lot of honest, sincere dealerships and sales staff, but you must be cautious when shopping for a car because there are some dealerships that are operating fraudulently and don't have your best interest at heart. In the segment, BuyHer Beware of Auto Estrogen Live!, Car-Buy-Her Founder, Sheronde Glover confirms this fact when she interviews attorneys Kevin Hickey and Brian Meadows. The duo share eight common scams they identified during a mass action lawsuit against a local dealership. Here are five of the eight common scams their clients encountered:
Scam #1 Bogus Sale
The Bogus Sale is one of the scams that we shared in the article I Ended Up With Two Car Notes detailing how one woman ended up with two car notes after the dealership failed to sell her trade-in. At the time we didn't know this particular scam had a name or that it was so common so it's important to be very careful if you find yourself at the dealership with a trade-in. With this particular scam the dealership tells the buyer that they will advertise or sell their trade-in but don't actually do so, leaving the buyer possibly holding a note on both their new car and their trade-in.
Scam #2 Coached Repo
This is a tricky scam that dealerships use for individuals that may be upside down (owing more money than the cars worth) in their car payments. If the buyer can't seem to get out of their old car because they owe too much money and can't get a new loan, the dealership would coach them to stop making payments and to have their car repossessed. The buyer is told if their old car is repossessed the dealership will just take the car and cancel the debt, which is not true. In actuality this can destroy the buyers credit and makes it difficult for other purchases they may need to make later.
Scam #3- Changing the Paperwork
This scam is particularly troubling because in this scam the dealership is actually modifying legal documents. In this scenario the dealership was changing the original contracts signed by the buyers and then mailing the signed contracts out two to three weeks later. In other cases the buyers would sign blank contracts and afterwards the dealership would go back in and change the documentation by changing pricing or amounts on extras purchased. When the buyers received the paperwork later, they'd find prices exceeding the ones they agreed upon. Dealerships would often in this case use the buyers financing their car to work against them by raising the actual price of the car, but keeping the monthly payments the same by stretching the payments out over a longer extent of time.. Buyers have to be really careful with this one because contracts are often lengthy with a lot of small print. Most people don't take the time to read it, but the small print does matter and binds you legally. Buyers should ask questions about anything they don't understand on the contract.
Scam #4 You Can Bring It Back
Remember this saying. Don't take it home until you buy it. In this scam, paperwork is filled out partially and the dealership agrees to hold the paperwork and let the buyer test the car out for a few days with the assumption that the buyer is not really purchasing the car by saying, If you want the car we'll have the paperwork done and if not, we'll just tear the paperwork up. Once they buyer returns and opts not to buy the car they're told Sorry we've already processed this paperwork, this car is yours. To avoid this scam buyers should assume completing paperwork commits them to buying the car and there is no universal law that allows them to buy and return a car within two or three days.
Scam #5 Straw Man Purchase
This scam is used on individuals that don't have good credit and need a co-signer on the contract in order to purchase the car. In this scam the buyer would get someone to co-sign with them for the loan. They would later get the paperwork and find that everything had been reversed, the co-signer would end up being the buyer and the purchaser would be the co-signer. The dealership, often using outside financing, use them scam to ensure they're able to qualify the buyer.
Remember, anyone can be scammed regardless of gender, education or age so be cautious.
