Suing an Auto Dealer for Fraud

Auto fraud is a problem that affect many consumers. Perhaps a car dealership sold you a vehicle with known defects without disclosing them. Maybe the dealer misled you as to the terms of warranty coverage or failed to provide you with a valid title. Whatever the case, if you have been the victim of consumer fraud, you may have several remedies available to you under state and federal laws.

“Vehicles are very complicated and manufacturers sometimes try to push stuff out there without adequately making sure it’s safe and working properly,” says Christina Gill Roseman, a consumer law attorney in Pittsburgh, Pennsylvania. If you suspect auto dealer fraud, reach out to a consumer lawyer attorney for legal advice.

What Counts as Auto Dealer Fraud?

Auto dealer fraud happens when a dealership intentionally misrepresents or hides key facts during the sale of a vehicle. It can apply to both new and used cars, and it’s more than just a bad customer service experience or buyer’s remorse.

To win a fraud case against a car dealership, the law requires four key elements:

• Misrepresentation or deception. The dealer made a false statement or left out something important, like hiding prior damage, misrepresenting warranty terms, or lying about financing.
• Intent. You must show that the dealership either knew the statement was false or acted with reckless disregard for the truth.
• Reliance. You relied on what the dealer said when deciding to move forward with the purchase.
• Damages. You suffered a financial loss — this could be the cost of repairs, the difference in value, or even what you overpaid.

You’ll need evidence to back your claim. That could include sales contracts, Carfax reports, mechanic inspections, dealership communications, or anything else that proves what you were told and what actually happened.

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Common Examples of Car Dealer Scams

One notorious scam is odometer fraud. By lowering the mileage, dealers can charge thousands more than the car is actually worth. Yo-yo financing is another baited trap. Dealers tell you the deal is done, let you take the car, and days later, claim your financing fell through unless you agree to worse terms.

Non-disclosure is also a common fraud. Whether it’s previous accidents, flood damage, or a salvage title, dealers are legally required to disclose known defects or branded histories. If they don’t, and you relied on their word to make the purchase, that misrepresentation can form the basis of a fraud claim.

Other common schemes include bait-and-switch tactics, where dealers advertise one car or price but push a different one once you’re in the door, and title washing, which involves stripping a salvage or flood-damaged vehicle of its branded title to make it appear clean.

Finally, “packing the deal” involves slipping unauthorized charges into the final paperwork. This includes things like extended warranties, service contracts, or theft protection you never agreed to. If these add-ons weren’t clearly disclosed or approved, they shouldn’t be on the final contract.

State Lemon Laws

All states currently enforce lemon laws designed to protect consumers of certain vehicles that fail to meet basic performance and safety standards. As an example, Pennsylvania’s Lemon Law is similar to the majority of states and specifically applies to new car purchases that meet the following criteria:

• The vehicle is sold or leased for personal use (as opposed to commercial use)
• The vehicle is designed to transport 15 or fewer people on public roads
• The vehicle was purchased in the state and subsequently registered here, or purchased in another state and initially registered in the state
• The vehicle suffers a “defect or condition that substantially impairs” its “use, value or safety” during the 12 months following delivery, the first 12,000 miles driven, or the term of the manufacturer’s warranty, whichever expires first

Under these circumstances, the dealer and manufacturer are required to repair and cover any defects in the car. However, note that you can’t assert lemon aw rights if your vehicle’s problems are due to your abuse, neglect, or alteration of the motor vehicle.

Federal Magnuson-Moss Warranty Act

The Magnuson-Moss Warranty Act is a federal law that does not impose the same mileage or new-car restrictions as state laws, although the initial defect must still occur within the term of the manufacturer’s or dealer’s original warranty.

The Federal Trade Commission (FTC) also enforces a Used Car Rule that prohibits any car dealer from misrepresenting the “mechanical condition” or warranty terms of any used vehicle. The dealer must also disclose upfront if a vehicle is sold “as-is” and without a warranty. And where there is a warranty, the dealer must inform the buyer how much of any repair costs will be covered.

It is also important for used car buyers to exercise their own due diligence. You should always obtain a vehicle history report, which contains a record of any prior accidents involving a car or truck. If a car salesperson knowingly sells you a car that has an accident record and fails to disclose that fact, you may be able to sue for damages.

What Are Your Legal Remedies for Auto Fraud?

Several remedies are available to those who find themselves victims of dealership fraud. There is no one-size-fits-all solution, so the remedy chosen will depend on the circumstances surrounding the fraud:

• Contract rescission. The sale is undone, and the vehicle and money are being returned to each party.
• Federal claim. A consumer could pursue a claim under the Magnuson-Moss Warranty Act or FTC regulations.
• Civil lawsuit. Available monetary damages could include reimbursement for repairs of the defective vehicle or its loss of value. While small claims court is an option, most claims are valued too high for this.

If the fraud is especially egregious, some states make punitive damages available. This award amount goes beyond just getting lost money back to punish the dealership for its extreme and willful actions. If the fraud is widespread, the attorney general may choose to take action.

Steps To Take Before You Sue a Dealership

Once someone decides to sue a dealership, the next step is to seek out an auto dealer fraud lawyer. The lawyer will perform a case evaluation. This involves looking at the sales contract and the facts surrounding the situation. After an analysis, the lawyer will advise on the best course of action for recovery.

Once the lawsuit is filed, the lawyer will work to gather all supporting documents, including the sales contract, warranty documents, and communications. They will also request a vehicle history report. This will uncover any hidden damage or ownership issues.

How a Consumer Law Attorney Can Help

“Is it possible to do something like this on your own? Yes. Is it a good idea? No. Because the manufacturers treat me very differently from how they treat unrepresented consumers. ‘Oh no, your car has to be this very special, very narrow thing to qualify under lemon law, I’m very sorry,’” Roseman says. “They will lie and misrepresent the law.”

Roseman deals with lemon law cases “all day, every day,” she says. And with representation, the process can proceed much more smoothly and quickly, and legal action increases your chances of a good result. The other reason to call an auto fraud attorney, she says: “It’s free. Most attorneys who do what I do, if you lose, you don’t pay us.”

Lemon law attorneys often utilize fee shifting, which is similar to contingency but better, Roseman says. “With contingency, you don’t pay any money down, but the attorney gets 33 to 40 percent of your recovery. With lemon laws, the attorney fees are awarded in addition to your reward. It doesn’t diminish your recovery in any respect. So there’s no reason not to.”

Find Legal Help

Buying a car shouldn’t leave you with legal headaches. Auto dealer fraud isn’t just unethical; it’s illegal. From misrepresenting a vehicle’s condition to hiding title problems, dealerships can be held accountable under state and federal laws. If you’ve been misled, you may be entitled to a refund, repair costs, or other damages. A consumer protection attorney can help you build your case and fight for what you’re owed. Their legal advice and guidance ensure you protect your legal rights.

Use the Super Lawyers directory to find a trusted attorney with experience in auto fraud or consumer law.