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Fraud Is Rampant In Auto Sales Industry, Consumer Group Warns
News Source: Public Citizen
Published Date: December 01, 2003
 
Editor's Summary:
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
 
Read Full Story
 
 
 
 
Reader Comments
 
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dw says:
I brought a new ford expedition from a dealership. they held back an
disability insurance application and forged my signature on the application
and the section of the contract that consents to charge for disability
insurance.
Posted by: dw on May 10, 2004
Tom Jones says:
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 etc.. 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!!!!
Posted by: Tom Jones on February 12, 2004
 
Mr. Mark A. Gatz says:
"Otis Ford Put Used Parts On My New Car". www.otisfordsucks.com. Thank you.
Posted by: Mr. Mark A. Gatz on January 27, 2004
 
George W. Williams says:
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.
Posted by: George W. Williams on December 14, 2003