WASHINGTON, D.C. - Every day, consumers across the country who buy automobiles are bilked of hundreds and sometimes thousands of dollars apiece by fraudulent auto sales representatives perpetuating one of the most pervasive scams in this country, according to a new report by Public Citizen.
The report, Rip-Off Nation: Auto Dealers’ Swindling of America, outlines the way auto dealerships rip off customers and is supported by documents obtained by auto sales industry whistleblower Duane Overholt, who worked in Florida auto sales for 20 years. Industry-wide practices range from inflating the cost of warranties and reporting one set of numbers to the customers and another set to the bank, to stuffing the contract with extras that the customer never agreed to pay for. The size of the purchase, the flurry of paperwork and the complicated financial deals make consumers particularly vulnerable to the schemes developed by dealerships to squeeze the highest possible profit from each sale.
The fraud is rampant. Customers in California, Florida and at least 37 other states have been robbed, according to a recent “Dateline” report. Further evidence is provided in a host of lawsuits documenting patterns similar to those explained in the report in at least nine states.
As outlined in the report, auto buyers are cheated in many ways:
- The dealer boosts the manufacturer’s suggested retail price with extras, some of which may already come with the vehicle.
- Sales managers run credit reports on potential buyers without their permission, using the driver’s license the customer provides before going for a test drive. With this information, the dealer can learn how much credit the customer has and even what the customer’s last car payments were, for use in price negotiations.
- Banks that have good relationships with dealers may insist on a higher interest rate in order to kick back to the dealer the dollar value of a few percentage points of the loan, without the buyer’s knowledge.
- Customers are manipulated during the sales process to pay more than the agreed-upon price. This is often done with the use of worksheets listing add-ons, although few of the items are associated with a specific price.
- If the sale is made after hours, customers are asked to sign blank bank forms that the dealer offers to fill in later, ostensibly after talking to a bank during business hours. The numbers reported to the bank may not reflect what the customer agreed to.
- The dealer may add products to the sales contract after the customer leaves. And because customers don’t know they paid for a warranty or service contract, for instance, they never make any claims using it.
Public Citizen’s report, background information and statements given at a press conference are available at http://www.citizen.org/autosafety/dealerscam/.
(via Public Citizen)
15 responses so far ↓
george w. williams // Dec 14, 2003 at 9:48 pm
I recently purchased a vehicle from a used car dealer by the name of Highland Sales and Leasing where I was not issued the service contract until I got down right angry about the problems I was having with the car. Not even 3 weeks into owning the car I have been subjected to over $2000 dollars in repair bills,and found a loop in the sales contract where the “so called”down payment was in fact a scam to keep for the dealer, when in fact I was told that this money was to go towards the payment of taxes.
Mr. Mark A. Gatz // Jan 27, 2004 at 4:50 pm
“Otis Ford Put Used Parts On My New Car”. http://www.otisfordsucks.com. Thank you.
Tom Jones // Feb 12, 2004 at 3:01 pm
That’s why I tell my customers to stay away from small dealerships. Those little roadside dealerships will promise anything just to make a sale and unfortunately they don’t got the capital to back it up if something goes wrong. Larger (certified) dealerships are the place to go because they got the money for refunds ect.. with no hassle because they don’t want their reputation tarnished. So, if your looking for a car and you see a little dealership with the one you like but they have only 10 cars on their lot and a fat man laced in gold rings– Beware!! This salesman needs to make his monthly sale and your it!!!!
dw // May 10, 2004 at 5:10 am
I brought a new ford expedition from a dealership. they held back an disability insurance application and forged my signature on the appplication and the section of the contract that consents to charge for disability insurance.
Van Ingram // Jul 15, 2004 at 7:16 am
I took my car in for tires. I was told by Goodyear a national chain that it needed rear end work but they had no idea how much it would cost until they took it apart to find out. They did estimate it would be anywhere from $800 to $2000. You could hear the noise coming very very loudly from the car.
I choose to take the car to a trusted shop that we have used many times.
The Mechanic told us the same thing that he would have to take the rear end apart before he could tell us what was going on. On 7/13/04, he contacted Auto Services Company with the problem. Auto Services called me and told me the mechanic did not know what he was doing and that we would have to get a second opinion. This was from Shane their employee that called.
I inquired how do I get a second opinion the car is up on a rack broken down are you going to pay for the labor? No was his response. Now I am stuck and he knows it. Shane is speaking as an experienced mechanic so he knows that to qualify the rear end problem requires the rear end to be taken apart and that cost labor. I have no choice I am out hundreds in labor. What do I do about the labor I ask? Again Shane’s response was that was my problem. Now I am either out several hundred dollars and take a chance that they will pay the next Mechanic or try and work it out. I decide to take my chances with the dealer that is working on it now. I made this decision not to loose the labor I had already spent because I had problems with them before in Missouri with another Mechanic where they only eventually paid a very small percentage of the bill.
Since I knew I was stuck I called Johnny one of the Supervisors. Johnny tells me it is probably an ok analysis of the problem. This is a standard problem for GM’s. And I don’t have to get a second opinion. It is not however ok to use dealership parts they are to expensive. If I want to pay the difference in the parts and he (the mechanic) will call back again with the problem then it will be ok.
I have the mechanic call.
About an hour or so later I get a call from James another supervisor who has a different story he tells me that since it was not a mechanical breakdown it will not be covered. Wow now we have three stories in one six hour period. In the meantime I just tell the shop fix my car.
Now I ask for who is in charge and I am told Mark. When I speak to Mark, his reason is because the repairs are done with out authorization and it is clearly printed on the back of the contract. I ask ok any compromise. No!!!!!!!!! Mark says there is no one Higher in the organization than him to talk to.
He gets loud and is not even interested in any other details he has found his way out. He is not interested in paying one penny. In short now I have a bill for $966.85. He says he will never pay.
Lots of double talk, Lots of excuses and trying to find reasons to not pay.
Christi Greiner // Sep 17, 2004 at 11:59 am
I am trying to find out about consumer rights when it comes to dealing with used car dealerships. I am in the middle of a horrible experience with Daewoo of Sacramento. From day one they have made fraudulent claims, long story short they now are forcing us to do a voluntary reposession even though we have made every payment on time and even early, they are trying to get out of doing what they are supposed to do by making us do a voluntary repossesion. Help! I need to find out more about my rights and what to do when those rights have been severly violated. Any suggestions are welcome. Thank you
Henry Ebner // Oct 19, 2004 at 12:31 pm
I bought a new car from Universal Nissan (Los Angeles). When I bought the car the sticker was not on the car. I was lied to at every turn and when I asked the total price for the car I was continually distracted by the sales staff. I ended up paying an additional $12,000 for the car, almost double what the car cost.
kmg // Oct 22, 2004 at 8:16 pm
We are upside down in our current car loan by about $5,000. We recently looked at a new car trying to get out of this situation and the car dealership told us to give it back to the bank (voluntarily repo) and started trying to sell us the new car. I don’t want to do that to our credit report because we have made every payment on time and in full…does anyone have any suggestions?? I would appreciate it. kylanova28@hotmail.com
Mary // Dec 1, 2004 at 1:00 pm
I have some information on Daewoo of Sacramento and how to deal car dealership fraud. Email me!
barry blumenfeld // Feb 26, 2005 at 2:41 pm
i too was told by a dealer to voluntary repo….he said since my credit is great it will not affect me that much please advise
teresa // Mar 20, 2005 at 12:29 pm
I bought a truck from Trucks Only location Mesa, AZ. I raded in my pathfinder for for this Dodge and drove it off the lot that night with the intent on buying that Dodge. The finances did not go through for reasons that I had changed Jobs. One and half months later they call tell me bring the truck back because you did not get financed. Since then I have tried to return the Dodge and get my trade-in(Pathfinder)back but there is only one problem THEY CAN NOT PRODUCE MY TRUCK, and the last time I was at Trucks Only they took the Dodge keys from me and said find a ride home: Yes I needed to call someone to come and get me if I was too get home. I was not leaveing without wheels I tolled them. They did give me the keys back,but since all of this they have not tried to contact me. I do not Know what my right,could someone Please help me?
Ginger // May 13, 2005 at 5:36 am
If someone can help me on the legal side of this. I am 21, I bought a truck from toyta, or at least I thought I did. We have had the truck for two weeks when the dealership calls and says we need another signer because your credit did not go through because of the fact i already have an auto loan in my name. So I said nope, you can come and get the truck and hung up. So my question is, they have all this paper work that I have signed stating I will take care of the truck, make sure all payments are paid on time and so on and so forth. Shouldn’t I ask for them to give those papers back to me, or shouldn’t I have them sign something stating I void all papers regurading the truck? Please someone email me back asap…This is supose to be going down today. Thanks
chanda // May 24, 2005 at 5:00 am
My car was reposessed last night while I slept. Sounds ordinary right? well, no, my payment was due yesterday and I only have 2 more payments to pay it off completely. Also, when I bought the car the dealer (bud’s auto sales, Indianapolis Indiana) had agreed in front of several of my family members to have the non-working sun roof repaired very soon as a condition of me buying the car. It has been three years and the sunroof is still not repaired and the dealer wants to charge me for my $260 payment and a $500 reposession fee! what do I do? He pulled this scam on my last payment also!
Chanda
bob curtis // May 26, 2005 at 10:42 am
i made a 500.00 payment to ford motor co on april 5 2005.they said this brought me current except for120.00 late fees.on may 2 2005 they called and said i was 3 months behind,how i do not know.any how i paid them 500.00 on may 5,(my pay day is evey 2 weeks)isaid i will send a payment in a couple of weeks and catch up.they called the very next day demanding payment,they have called me every day several times a day at work,at home at nite and even told my ten year old daughter that daddy better make a payment to ford or they were going to take his truck.may 24 in the middle of the night the repoed the truck and took it 150 miles from my house.i called them and they said if i paid 3 months late payment which i do not owe 1 month extra and towing and storage i could have it back.i said hell no what recourse if any do i have,any help would be apprecated i also know about add ons after hrs they jammed it to me with that one
j.f. // Jun 13, 2005 at 3:39 am
Boy do I have a whopper to tell. I bought a 1997 dodge neon from this dealership here in Honolulu Hawaii, JN Chevrolet. I was just looking for a cheap back and forth to work car since the gas here is so expensive. So my wife and I both being mechanics checked out the vehicle. We could tell right off it had been in a few accidents because it had bondo in several places, but it was cheap and good on gas so we said ok. We worked the dealership over about the price, were only going to be paying about 5000 after all taxes and interest. Pretty good deal right for something we would get rid of in two years when we leave the island. So we drove off in it that night. We were told by the Military Police as we were coming on post to go home that the tags and safety inspection had expired, which we hadn’t noticed when we checked the car. So the next day we went to have the safety check done. Just as the inspector started checking it, the drivers side door wouldn’t open, the lights started flickering, the breaklights went off and a few other things. Needless to say it didn’t pass. So we called the dealership they told us to bring it in. So we headed right over there. We talked to our salesman and get this he offered to get us an “under the table” saftey inspection done. Yeah the sales guy from the dealership offered us this, then told us that all the people he’d gotten them for had gotten caught. Now first of all why would I get something like that illegally especially being in the military and secondly why would I do it if everyone else had been caught? DUH!!!!! So naturally I went and told the manager what his employee had just offered us. The guy still works there to this day. So then the manager says well lets find you another car and we’ll just forget about the neon like if you never bought it. So we thought ok since we wouldn’t have to worry about any of this voluntary reposession crap. So we got a 99 cavalier. It was nice but the steering popped. The manager said they would fix it but we had to wait a couple weeks because their service department was backed up. So about a week later the popping got really bad and we stopped driving it and called the dealership. We had another car through all this that we had purchased elsewhere when we came here. So the dealer said bring it in. We did and found out that the car had been in a accident and the steering column (which is colapsable to protect the driver), wasn’t replaced as it should have been they just put the pin back in, so the dealer fixed it so as not to get sued. We found out the day before we were supposed to take the car to get fixed that my brother has passed away and we had to go home for the funeral, so we took the car in and picked it up the day we got back. The very next day we went for a drive and the car overheated so bad that we had to pull over and turn the heater on full blast for about an hour. We took it back to the dealer as soon as it was cooled because we were only a mile or so away. Instead of fixing it they offered to put us in yet another vehicle and they would just consider the other car a trade in since we had had the cavalier for over a month. We were very hesitant about this considering this was the second car we had to return to them because it had serious problems. But we looked around anyway. We found this really nice 2000 Dodge Dakota. We figured it’s a truck has only had one owner, and it’s newer than the two previous vehicles. We thought about it for a few hours and finally decided to go for it, you know that old saying “THIRD TIMES THE CHARM”. So we bought it in November ‘04. It ran great there were no problems, we did a check for accidents there were none and we haven’t had any problems until about three weeks ago. The power steering and the rack and pinion on the truck went out WHILE I WAS DRIVING and MY WIFE AND THREE YEAR OLD DAUGHTER WERE IN THE TRUCK. The steering wheel locked and we were coming around a turn and it forced us off the road. Luckily it didn’t roll. Instead we hit a big lava rock on the passenger side. It made a big scratch on the side of the door and dented the rocker panel. Now when we bought the truck we bought the best warranty for it that covers everything (including damage caused by any kind of mechanical failure),and gap insurance for it. Well it was memorial day weekend when this happened so the warranty company wasn’t open. Well we called the dealership and they said there was nothing they could do until the warranty company told them it was ok. We thought ok this is Hawaii maybe it’s different here just like everything else. So then the following Tuesday we called the warranty place and can you believe it they didn’t even know who we are, they had no warranty information for our truck, nothing, they even checked by the vin number. I was shocked and pissed off beyond belief. We have copies of the warranty paperwork, we even have the contract for our truck where it shows that we are paying for the warranty and the gap insurance, but the company doesn’t have anything. The dealership never sent them the paperwork. We’ve had the truck for seven months which is way more than enough time to send the paperwork considering the warranty company has a branch here that is only four blocks from the dealership. Needless to say it’s beyond rediculous. So we called our military legal office about it. They told us to bring all the paperwork of course and also to bring copies of our credit report and since we had been turned down for credit we got a free copy. We printed our Experian report off the net and had a look. Wouldn’t you know the dealership screwed us there too. They reported a false address to the credit agency on my wife and myself, and not only that but they reported a different false address for each of us. Pretty crazy right? That’s not all. We still don’t have the registration for our truck, the dealership messed up the paperwork for that as well. I called the DMV about a month after we had the truck and they told me that they would check it. So about an hour later the lady calls me back and says there was something wrong between them and the dealership but they would get it fixed and we would have our registration in a week or two. Now six months later we still don’t have it. We have to keep getting temps from the dealership. And as for the warranty, they even put the wrong lienholder on the paperwork and the warranty and gap insurance are the only two documents that have the misinformation, go figure. So our lawyer called the dealership and they said they would fix the warranty and send it over to the warranty company and we could just bring our truck in and they would fix the problem but that they weren’t going to fix the body damage even though it’s clearly stated in the warranty contract that it is covered too since the cause of it was something covered by the warranty. They said they would look into it but to bring the truck down and they would get it fixed except for the body damage for now so we could atleast drive it. They also told us that we didn’t need a copy of the corrected warranty, YEAH RIGHT!!!! I told them damn right I need a copy not just for my records and as proof that I have a warranty but also so I can make sure you didn’t change the coverage we have. They flat out told us they weren’t going to give us a copy. So we decided we would go to some other dealerships and trade in the truck for a brand new vehicle so we wouldn’t have to worry about any of this anymore. Now even damaged the truck is worth 5300 trade in. Now that value is without the lava liner it has or the undercoating it has to protect from rust and the 700 dollar mud tires we had put on it two months ago. The other dealerships were just as bad as JN Chevrolet. JN had upped the price and tricked us with the documents. As I said we have a three year old and she can’t sit still so my wife and I were taking turns watching her outside the office when we were talking about the paperwork and siging it but we both asked our questions and everything so we both knew what was going on with it. So then the guy told us how much the warranty was and how much the gap was and all the taxes and all that. We were supposed to be paying a total of 16500 for the truck after all the interest and everything. So they printed the contract and my wife signed it while I was watching my daughter. Then I went in and the guy had printed a different contract with a higher price for the warranty and the gap and the taxes and price of the truck. Now I didn’t expect them to do that because my experience with dealerships back home had always been okay. So I went in there and he told me my wife hadn’t signed the contract yet and I didn’t get the chance to ask her so I looked it over and signed it. I thought that was the price we had agreed to. My wife handled most of the money talk because she’s the walking talking calculator. So I signed then he told me my wife needed to sign it and another paper so I told her that she needed to go back and sign something. So she went in and the guy told her that he had to print a new contract because I had spilt pop on it. She didn’t know I hadn’t so she glanced at it and signed assuming it was the same contract. They had raised everything and we ended up owing 19000 for the truck. We didn’t notice until we got our first statement from the bank about our payments. The payment amount was the same but we were going to be paying for longer than the dealership had told us. We also went to our attorney about that and he said there was nothing we could do since we didn’t have a copy of the original contract. I know it sounds strange that my wife wouldn’t ask me and I wouldn’t ask her about signing but we had been at that dealership since nine am and it was already almost ten pm. We were exhausted and had our new truck so we weren’t concerned with that. We should have been. But how were we to know the dealership would change the contract? As for trading the truck for a new vehicle no one wants to because they don’t want to give us fair trade in and on top of that we would have negative equity which where we are from is added onto the total price of the car, but all the dealerships we went to here said we had to put the negative amount as our down payment. Now the payoff on the truck is only 13000 but they only wanted to give us 3000 for our truck so they wanted us to have a 10000 dollar down payment. So we went back to the JN to try and resolve this and they had the nerve to say okay we’ll take the truck back as a trade in and put you in a new vehicle and they said they would add the negative equity onto the total price but like we would trust them, but we played along so we could get the warranty stuff fixed and drive a new vehicle. And OH MY GOODNESS, you would not believe it the car we wanted to drive was on the showroom floor so they had to move a couple of other cars and bring it out and the manager who was driving it hit the wall IN THE BRAND NEW TRIBUTE. He hit the wall in a 30000 dollar vehicle and expected someone to not only still want to buy it but to want to buy it without them lowering the price for the damage. We weren’t actually even considering buying it we just wanted to drive it but really this guy works at a dealership driving cars all the time and he hits the wall. But the nerve of them trying to sell us a yet another vehicle after all the shit they’ve done. They are just trying to keep us from sueing them for all that they have done. We reported them to the better business beurea. Now we are trying to pursue taking them to court but in the meantime we are trying to get rid of this truck and we may be forced to do a voluntary repo and we don’t want to do that because my husband already had identity stolen and we are still trying to get that cleared up and then to add a repo voluntary or not. Does anyone have any advice as to what we can do to get rid of this truck without repoing it?
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