CONSUMER PROTECTION LAWYER
According to the National Consumer Law Center, auto dealer profits on sales of new cars are small. Dealers make more money on the financing, insurance, service contracts and repairs, and on the sale of used cars. This results in a huge financial incentive to “push the envelope” and increase dealer profits.
Car sales are also complicated transactions involving state titling and registration laws, trade-ins, financing, leasing, physical damage and liability insurance, credit insurance, add-ons, and other fees. Some car dealers take advantage of the complexity of car sales when dealing with consumers.
Dealer employees, especially Finance and Insurance (F&I) staff, are paid by commission. The higher the profit from an automobile sale, the more money they make. The more add-on products sold, the higher the commissions. Dealers are notorious for engaging in aggressive “loan packing”—the sales process after selling the vehicle—by rolling into a consumer’s loan a dizzying arraying of high-priced, back-end products of questionable value: rust proofing, paint sealing, glass etching, fabric protectant, service contracts, and gap policies.
Salespeople regularly cross the line between permissible “puffery” (“a statement purporting to be merely the seller’s opinion or commendation”) and outright misrepresentation. For example, many salespeople will tell you that GAP insurance is “required” to purchase a vehicle. That is unquestionably false.
Specific examples of automobile fraud include odometer tampering, salvaged vehicles, bait and switch, false advertising, yo-yo sales, and falsifying buyer credit information. “Lemon laundering” is the resale of a car that was repurchased by a manufacturer or dealership from a consumer under one of the modern lemon laws but sold as certified pre-owned vehicles. Another common technique is concealing vehicle history, either by nondisclosure or fine print, such as use for demonstration, short-term rental, and “loaners” for other customers.
Fortunately, the law protects consumers from unscrupulous dealers