Are you thinking about buying a car but worried about dealership scams? Car dealership fraud cases are more common than you might think. According to the Federal Trade Commission (FTC), the most common types of car dealership fraud are false advertising and hidden extra fees, showing the importance of staying alert.
In this post, along with false advertising and hidden fees, you’ll learn about other types of car dealership fraud. You’ll also get to know real-life cases and find useful tips to help you avoid becoming a victim of these shady crimes.
Need support after a scam? Join our community today.
What Are the Common Types of Car Dealership Fraud?
Car dealership fraud can happen at any stage of buying a vehicle, making it important for buyers to stay alert during the full process. These are the most common types of fraud you might see:
1. Inflated Vehicle Prices
Sometimes dealers manipulate the vehicle sale price, which is supposed to correspond to what they paid the manufacturer. For example, a dealer might include extra charges that were supposed to be part of the original price under false titles, like “processing fees”.
2. Bait-and-Switch Tactics
This tactic includes advertising a car at an attractive price to get customers in. Once they show interest, the dealer might say that the specific model is no longer available and instead push a more expensive or less desirable model, or they might offer the advertised model at a price higher than advertised.
3. Hidden Add-On Charges
During negotiations, a dealer might add extra charges for things like extended warranties or special coatings without telling you clearly. These costs get added to the final price without your direct okay.
4. Low-Cost Trade-In Offers
When trading in your old car, some dealers might offer you much less than its actual worth. Then, they earn a profit by reselling it at a higher price, banking on your lack of knowledge about the vehicle’s true market value.
5. Misleading New Vehicle Sales
A dealer may sell a car that has been returned due to malfunctions or issues as if it’s brand new. Legislation often requires such cars to be marked as unregistered vehicles, but not all dealers meet this requirement.
6. Unreported Restored Titles
Some scam dealers sell cars that have been restored from accidents or natural disasters without letting customers know this fact. These vehicles might carry hidden damage, presenting safety risks and financial losses.
7. Odometer Fraud
Manipulating the odometer to show less mileage is a common fraud. The odometer tracks how far the car has traveled, lowering the mileage makes the car look less used than it is, letting sellers charge more from buyers who don’t know any better.
Have questions about dealing with scams? Contact us for support.
Odometer Fraud in Car Dealerships: The Adam Newbrey Case
According to USA TODAY, Adam Newbrey, a 31-year-old businessman from Derby, Kansas, was convicted on 27 counts of criminal violations, including odometer falsification, identity theft, and phishing email fraud. His illegal activities took place mainly in 2020 and 2021.
What Did Newbrey Do?
Newbrey is said to have bought used vehicles from Kansas and Oklahoma, modified their odometers to show lower mileage, and then used fraudulent documents to obtain vehicle titles from the Kansas Department of Revenue that reflected these fabricated readings.
How Did Newbrey Commit Fraud?
Newbrey used these falsified titles to sell vehicles at higher prices thanks to his three car dealerships in Wichita—iDeal Motors, Midwest Wholesale, and Prestige Motors.
His operations came to an end in 2022 when iDeal Motors was banned from selling cars legally in Kansas following an investigation, which resulted in a fine of over $159,000 due to consumer complaints.
How Can You Avoid Falling Victim to Car Dealership Fraud?
Buying a used vehicle can be complicated with risks, especially with the shift to online and app-based sales. To protect yourself against scams, here are simple tips you can follow:
1. Be Aware of Unbelievable Deals
If a deal on a car seems too good to be true, it likely is. Scammers often attract buyers with exceptionally low prices for look-alike perfect or rare cars. When you find such offers, take a step back and evaluate before proceeding.
2. Take Your Time
Rushing into a purchase is a common mistake. Scammers frequently create urgency by claiming they’re relocating soon, dealing with an emergency, or selling on part of someone else. They might even pressure you to pay with unconventional methods like gift cards. Taking your time allows you to research and think your decision through, avoiding quick mistakes.
3. Verify Vehicle Photos
Do a reverse image search to check if the same vehicle photo shows up on multiple listings with different details. This can help you spot and avoid scams that use stock or stolen images to take advantage of buyers.
4. Insist on a Physical Inspection
Always see the car in person before making any payment. Pictures can be fabricated, and nothing replaces a physical inspection. Meet the seller in a safe, public location, verify their ID, and double-check that the name matches the one on the vehicle’s title.
5. Test Drive the Car
No matter how good a vehicle looks, a test drive is important. This is the best way to check the car’s condition, how it drives, and whether all features work as expected. Also, ask for the car’s service records to better understand its history and condition.
6. Check the Vehicle Identification Number (VIN)
The VIN is important for verifying a vehicle’s legitimacy. Use it to check with the Department of Motor Vehicles and the National Insurance Crime Bureau to verify that the car hasn’t been reported stolen, affected by floods, or destroyed. Also, make sure the VIN matches on all parts of the car and on all documents to protect yourself from VIN scams.
7. Understand Liens on the Vehicle
It’s always best to do a complete line check, typically through your local DMV or a vehicle history report service, before completing the purchase of a used vehicle. This helps confirm that you won’t face unexpected debts or legal troubles after the sale.
Protect Yourself from Car Dealership Fraud with CDN Support
When buying vehicles, stay alert, be cautious, and be up-to-date to avoid any tactic of car dealership fraud. New FTC regulations are expected to save consumers over $3.4 billion and over 72 million hours each year in vehicle transactions, but being aware of common types of dealerships fraud can protect you against falling victim to scams.
Also, at Cryptoscam Defense Network, we give you essential resources and tools for detecting and preventing this type of fraud, checking the safety of your investments.
We Want to Hear From You!
Fraud recovery is hard, but you don’t have to do it alone. Our community is here to help you share, learn, and protect yourself from future frauds.
Why Join Us?
- Community support: Share your experiences with people who understand.
- Useful resources: Learn from our tools and guides to prevent fraud.
- Safe space: A welcoming place to share your story and receive support.
Find the help you need. Join our Facebook group or contact us directly.
Be a part of the change. Your story matters.
Frequently Asked Questions (FAQ) About Car Dealership Fraud Cases
How Do You Know If a Dealer Has a History of Fraud?
To check if a dealership has a history of fraud, follow these steps:
- Online Research: Search for the dealership’s name along with keywords like “fraud” “scam” or “lawsuit”. Check out websites like our CDN blog, forums, and news articles for any reported issues.
- Better Business Bureau (BBB): Visit the BBB website and search for the dealership to see if there are any complaints or negative reviews.
- State and Local Resources: Check with your state’s attorney general’s office or local consumer protection agency for any submitted complaints about the dealership.
- Ask for a Vehicle History Report: Ask for a Carfax or AutoCheck report. These reports can reveal if the dealership has been associated in selling vehicles with fraudulent histories.
- Customer Reviews: Read reviews on platforms like Yelp, Google, and social media to look at other customers’ experiences with the dealership.
What Should I Do if I Suspect the Odometer has Been Altered With?
If you suspect the car you’re interested in has been subject to odometer fraud, here are the steps you should take:
- Get a Pre-Purchase Inspection: Take the vehicle to a trusted mechanic or service center before making any payment. They can check if the odometer has been altered and give an honest evaluation of the vehicle’s general condition, including the engine, transmission, and tires.
- Test Drive the Vehicle: Ensure you always drive the car before finalizing your purchase. Pay attention to the odometer to see if it’s increasing as expected. If the numbers don’t change or increase irregularly, there might be an issue with the odometer.
- Report Odometer Fraud: If you’re sure that the vehicle’s number of miles has been altered, contact the authorities immediately. Each state has an agency that handles automotive fraud. You can also reach out to the DMV for guidance.
- Consult an Odometer Fraud Attorney: If you’ve already bought a car with a rolled-back odometer, consult with a lawyer. They can advise you on your options, which may include seeking compensation from the seller.
- Buy from Reputable Dealerships: Private sellers and unlicensed sellers are more likely to get caught in odometer fraud. Dealerships, on the other hand, face severe penalties for such practices, and usually offer guarantees on their used vehicles.
How to Identify a Financing Scam at a Car Dealer?
If you’re worried about falling victim to a financing scam at a car dealership, here are some key warning signs to watch for:
- Contact the Dealership Directly: Before sending any money, always call the dealership using the official phone number found on their verified website. Don’t rely on contact information from unsolicited emails or social media posts.
- Check Social Media and Reviews: Legitimate dealerships are active on social media platforms like Facebook, X, and Instagram. They interact with customers and post regularly. Look at reviews on Google and other platforms to see what others are saying about the dealership.
- Evaluate the Website: A professional dealership will have a well-designed website with a secure URL (https://). If the website looks unprofessional or the URL seems suspicious, it might be a scam.
- Insist on Meeting in Person: If the seller refuses to meet you at the dealership or is refusing to provide a complete vehicle history, it’s a warning sign. Always meet in person and do a complete check of the vehicle.
- Verify Google Listings and Reviews: Check if the dealership is listed on Google My Business. Read reviews and see how they handle customer feedback.
- Consistency Across Platforms: A reliable dealership will have consistent branding across their website, social media, and physical location. Look for uniformity in their name, logo, and contact information.
- Knowledgeable Sales Staff: A reputable dealership will have well-informed sales staff who can answer your questions without pushing you into a buy.
- Check Vehicle Stock: Ensure the dealership has a variety of vehicles in stock and can provide detailed information, including the vehicle’s history and evaluations.
- Trust Your Instincts: If something feels off about the dealership or the deal, trust your instincts.
What Should I Do If I Bought a Car with Hidden Problems?
If you find hidden problems after buying a car, here’s what to do:
- Expert Review: Have a mechanic estimate repair costs.
- Contact the Seller: Send a certified letter detailing your claim and desired dispute resolution, like refund or repair costs.
- Negotiate: If no agreement is reached, you may need to file a lawsuit with the expert report as evidence.
