6 Common Car Dealership Scams to Look Out For

Generally speaking, car salespeople don’t always have the cleanest reputations. Every year, consumers in the United States lose substantial sums of money to car dealer scams.

There are many small details to consider when purchasing a new vehicle. As a result, the auto industry is a field in which scammers can easily take advantage of everyday buyers.

Over the years, salespeople and dealerships have become well-versed in car selling techniques – some of which are unethical or just plain fraudulent. Fortunately, many of these can be avoided with a bit of due diligence on the part of the buyer.

Here are six common car dealership scams to keep an eye out for when purchasing new or used vehicles.

1. Odometer Tampering

Tampering with a car’s odometer is a federal offense, but some dishonest dealerships still attempt this scam. According to the National Highway Traffic Safety Administration, odometer fraud costs American car buyers more than $1 billion every year.

Even though this car sales scam has become a bit harder to execute thanks to modern digital displays, it still happens. Some scammers are able to reprogram the odometer with relatively inexpensive software. Others use devices made for legally recalibrating faulty odometers.

In California, odometer fraud violates the Car Buyer’s Bill of Rights. If a dealership is caught doing this, it can be held liable for punitive or compensatory damages under California’s Consumer Legal Remedies Act.

So, how can you protect yourself from this car dealer scam?

Start by looking at the vehicle’s mileage listed on the maintenance records, then compare it to the CarFax Odometer Check. If there is a big difference, head for the door.

2. The “As Is” Car Dealer Scam

The “as is” car sales scam can be tricky. Essentially, when you buy a vehicle “as is,” you agree to purchase the vehicle regardless of its condition or hidden problems. This means the seller is not responsible for any current or future issues that may arise.

Dealerships will sometimes use the “as is” scam to quietly eliminate the Implied Warranty of Merchantability. These warranties are automatically imposed on used cars with an express warranty and guarantee the vehicle will provide safe transportation. 

Fortunately, the law is on your side if you purchase a defective car “as is.” Under California Lemon Law, the only way to legally eliminate the Implied Warranty of Merchantability is to clearly display an “as is” label on the vehicle while being showcased for sale. 

The label must state that:

  • The vehicle is sold “as is” or “with all faults.”
  • The risk of quality and performance of the car is with the buyer.
  • If the vehicle is defective, the buyer takes full responsibility for any needed repairs.

No agreement or “fancy footwork” can sidestep these requirements. As you shop, pay close attention to the phrasing and understand the risk you adopt when purchasing any “as is” vehicle.

3. The “Yo-Yo” Financing Scam

The yo-yo financing scam is a deceptive and unfair practice that some car dealerships use to exploit customers. It works like this:

You agree to finance a car through the dealership, and they give you the keys and let you drive off the lot. A few days later, the dealer calls and tells you that the financing fell through, and you need to return the car.

When you get back to the dealership, they try to sell you a more expensive car with a higher interest rate. Then, if you don’t agree to their new terms, they threaten to repossess the car.

This is an illegal practice, and you don’t have to put up with it. California’s Consumer Legal Remedies Act protects consumers from being taken advantage of in this way.

To protect yourself, never drive the car off the lot unless you have 100% committed to the financing. You never want to find yourself behind the wheel of a new vehicle that the dealership can threaten to take back.

4. Selling Prior Rental Cars – Without Informing the Buyer

If a vehicle has been previously used as a rental car, it tends to have a lower resale value. This is due to the common perception that the vehicle could have been abused by renters and may need costly future repairs.

As a result, the California Vehicle Code requires dealerships to disclose any prior rental registration to the customers before they purchase a vehicle.

In a perfect world, all car dealerships would follow this rule. Unfortunately, many scammers will buy former rental cars at auctions for pennies on the dollar. Then, they try to sell them at a higher price without disclosing the former rental status. This is an easy way to make money when dealing with young or inexperienced consumers. 

Fortunately, foiling this sketchy car dealership scam is easy. Online resources like AutoCheck and CarFax do a good job of letting you know whether a vehicle was once registered as a rental. All you need to do is enter the VIN and you should get the information you need.

If you bought a defective vehicle that you found out was a rental later, you’re not out of options. A good lemon law lawyer can help you file a claim against the seller.

5. The “Add-Ons” Scam

The “add-on” car sale scam is one of the oldest tricks in the book. The dealer will try to sell you a bunch of extra features that you don’t need or, worse, that don’t even exist. They may tell you these features are essential to the car, and that you won’t be able to find a similar model without them.

Dealerships often do this in an effort to get rid of defective, used vehicles. By loading it with extra features, they hope to make the buyer look past any potential problems. Other times, they’re simply trying to make a quick buck by selling you something you don’t need.

To avoid falling for the car dealer scam, do your research before you step foot on the lot. Know what features are available on the model you’re interested in and stick to your budget.

6. The “Bait and Switch”

The bait and switch scam is a deceptive advertising technique. A dealership will lure customers in with an irresistible offer, only to switch them to an inferior product or service once they’re on the hook. 

For example, a dealer may advertise a new car for an unbeatable price. When you get to the dealership, they tell you the vehicle is no longer available. Instead, they try to sell you a used car or a more expensive model.

This is one of the most common car dealership scams out there, so it’s important to be on the lookout. The best way to avoid it is by doing your research ahead of time. Once you’ve found a few dealerships with reasonable prices, give them a call to confirm the availability of the car you’re interested in.

If you do find yourself caught in a bait and switch scheme, don’t be afraid to walk away. You can also file a complaint with the California Department of Consumer Affairs since practices like this are illegal in the state.

In Conclusion

The harsh reality of buying a vehicle is you always need to be on your guard. Negligence behind the scenes at car dealerships happens all the time and some unethical salespeople prey on inexperienced car buyers. If you don’t have the knowledge and critical eye for how to beat these tactics, you could very well get burned.

If you are wondering what to do if scammed by a car dealership, feel free to contact us with questions. If the vehicle is defective, you might be entitled to benefits under California Lemon Law.

Share this post
Table of Contents