We’d all like to believe that car dealers are honest, hardworking professionals who genuinely care about building customer relationships.
To be fair, many of them are.
Unfortunately, some dealerships have earned a reputation as shady hustlers who exist only to fast-talk unsuspecting consumers out of their money. They rely on manipulation, bad dealership practices, and even outright deception to close deals.
Worse still, these dealers often count on people not taking the time to read through the fine print or question the terms of their contracts. They exploit your trust and hope you won’t notice until it’s too late.
As a buyer, you deserve to be treated with respect and honesty at every step. And knowledge is your best defense against being taken for a ride. In this post, our lemon law attorneys will go over the most common illegal car sales tactics employed by dealerships, and how you can protect yourself.
5 Common Bad Dealership Practices to Know About
Car dealers may be friendly, but they aren’t your friends. While not all of them are out to rip you off, you should be prepared for situations where a salesperson uses pushy tactics to maximize profits.
Here are some common illegal car dealership tactics shady car dealers might try to pull.
1. Bait-and-Switch
The bait-and-switch scam is one of the oldest tricks in the book. Generally, the dealership advertises a great deal on a vehicle to get you through their doors. But when you arrive, eager to check out the car, they suddenly tell you it’s been sold.
Conveniently, they have a similar model available — but it will cost you more than the advertised price.
How to Avoid it:
Stick to what you want. If you’ve done your homework and know what you’re looking for, there’s no reason to second-guess yourself. Don’t let a dealer push you into something you don’t need or want. Be patient — either wait for the right car to become available or head to another dealer who has it in stock.
The good news is that the government is cracking down on these bad dealership practices. Recently, the Federal Trade Commission (FTC) finalized the CARS Rule, which prohibits dealers from using bait-and-switch tactics (and exploitative junk fees) to mislead buyers.
2. Payment Packing
Payment packing is when a car dealer inflates your monthly payment without you realizing it. Dealers often refer to this tactic as “getting a little leg.”
Let’s say your actual monthly payment should be $300 on a 60-month loan. The dealer might get you to agree to a higher payment of $350 per month. The $50 overhead is the “leg”.
Once you agree to the inflated payment, the finance or warranty salesperson could step in and offer to include an extended warranty, GAP insurance, or other unexpected and unnecessary fees, while keeping your payment “the same”.
In reality, your payment should be much lower, and these extras are what’s driving it up.
How to Avoid It:
Always ask for a breakdown of your out-the-door price. Make sure you understand exactly what you’re paying for and don’t accept any add-ons unless you specifically want them.
If you’ve already signed the service contract and noticed something off in your payment, go back to the dealership and ask for an explanation. You can negotiate to have the extras removed if they were added without your permission. If they refuse, seek legal help.
3. Yo-Yo Financing
In a yo-yo loan scam, the dealer initially “qualifies” you for a loan at an attractive rate. However, later on—usually at an inconvenient time—they inform you that the original financing didn’t go through. The only way to keep your car is to agree to a much more expensive loan.
Essentially, this bad car dealership practice is designed to pressure you into accepting unfavorable terms after you’ve already gotten attached to your new vehicle.
How to Avoid It:
Get prequalified with other lenders to know what kind of interest rate you qualify for. Confirm that you’ve been fully approved for the financing the dealer offers, and only leave the showroom with a contract that clearly outlines all of your loan details.
In case your financing does fall through, the dealer should honor the “owner’s right to cancel clause” in your financing agreement.
4. Odometer Fraud
Another completely illegal car dealership tactic, odometer fraud happens when a dealer rolls back the mileage on a used car to make it appear like it has fewer miles than it actually does. This is typically done because cars with lower mileage can command higher prices.
Odometer fraud is a serious crime that can leave car buyers facing thousands of dollars in unexpected repairs and breakdowns. According to the National Highway Traffic Safety Administration (NHTSA), more than 450,000 vehicles are sold each year with tampered odometer readings, costing American car buyers more than $1 billion annually.
How to Avoid It:
To protect yourself from odometer fraud:
- Compare the mileage listed on the title with the current odometer reading.
- Be cautious if the car shows excessive wear and tear, like scratches and dents, but has a surprisingly low mileage.
- See if the mileage is hard to read, or if the odometer shows signs of tampering, such as discoloration or scrapes.
- Use an OBD2 reader to scan and help detect any false readings.
You can also run a free Carfax check to see if the vehicle has been flagged for odometer rollback.
5. Failing to Disclose Damage or Defects
In California, like many other states, it’s illegal for dealerships to commit fraud or make material misrepresentations to sell a car. This includes advertising a vehicle as “clean” or having no accidents when, in fact, it has sustained significant damage.
Unfortunately, this happens more often than you’d think.
Many buyers only discover these hidden problems after driving the car for a week or so, when they start noticing engine trouble or other issues. Once they take the car to a mechanic, they realize the extent of the damage and that they’ve been misled.
How to Avoid It:
Before purchasing any used vehicle, even a Certified Pre-Owned one, always have a trusted mechanic conduct a pre-sale inspection. It’s worth the extra effort to avoid a costly mistake.
If you find yourself with a damaged/defective car, act quickly. Take a screenshot of the original online advertisement, especially if it states the car had no accidents or damage. Use that evidence when addressing the issue with the dealership.
In case the dealership refuses to accept the car or make necessary repairs, your next step is to file a complaint with the California Department of Motor Vehicles (DMV). You might also consider posting a review about your experience to put pressure on the dealership.
California also has robust lemon laws to protect buyers. If the car you bought has significant defects that persist after a reasonable number of repair attempts, you might be eligible for a refund or replacement under the California lemon law.
Talk to a lemon law attorney to determine the best path forward.
Bonus: The Four-Square Tactic
Reputable dealerships hate the four-square tactic because it gives the entire industry a bad name. Despite this, it’s been around for decades, and many unscrupulous car dealers still use it to confuse and take advantage of customers.
In this technique, the dealer draws four squares on a piece of paper, each representing a different part of the deal: vehicle purchase price, trade-in value, down payment, and monthly payments. They then shuffle numbers between these categories to make it seem like you’re getting a great deal. However, it’s just a smokescreen designed to exhaust and pressure you into signing without fully understanding anything.
Another common move is when a salesperson asks you to initial a piece of paper next to a promise to buy the car if the numbers are agreeable. Sales managers may come out and say something like, “Doesn’t your word mean anything?” But this is simply an attempt to guilt you into completing the sale—there’s nothing legally binding about that initial.
How to Avoid It:
- Discuss each element separately: Insist on talking about the vehicle price, trade-in value, down payment, and monthly payments individually. Don’t let the dealer combine or shuffle numbers across categories.
- Know your numbers: Do your homework before visiting the dealership. Understand the fair market value of the car you want, the value of your trade-in, and what you can afford as payment.
- Walk away if needed: If the dealer refuses to break things down clearly and continues using the four-square tactic, walk away.
Fight Back Against Illegal Car Sales Tactics
Buying a car can feel overwhelming, but knowing what red flags to watch for will keep you in control of the process.
If you ever feel pressured or uncomfortable during the transaction, remember that you hold the power as a consumer. Walking away from a questionable deal could save you a lot of stress in the long run.
Have you already fallen victim to one of these illegal car sales tactics? Don’t worry. At Cline APC, we’ve been combating auto retail scams for years. We offer FREE legal consultations to assess your situation and determine whether you have a valid case.
Contact us today at 888-982-6915, email info@clineapc.com, or schedule a free consultation. We’re here to help.
