Worst Dealer Scams
Whether because of outright fraud or unsavory business practices, car buying can be filled with pitfalls. Learn what they are and how to circumvent them.
Kyle G. Martz is outraged. In late 2007, Martz, 46, of Erie, Colo., purchased a 2007 Volkswagen Passat 4Motion with 1,200 miles on it for around $43,000 — several thousand dollars less than the sticker price. He was told it had been driven for only a short time by the owner of the Volkswagen dealership that was selling it. But that was only half the story.
"Within the first month, the car was back in the shop at least three times," says Martz, a national sales rep in the food business. "There were electrical glitches through the whole car — GPS, parking sensors, stability control. None of it worked." When Martz's mechanic stripped off some of the trunk's interior panels, he exposed a bunch of shoddy spot welds, indicating the car had been in a severe rear-end collision.
According to the Department of Motor Vehicles officials and state fraud investigators we surveyed, Martz had fallen prey to one the most common scams dealers commit — fixing a totaled car off the books and then reselling it "as is."
While experts say only a small number of dealers actually partake in such illegal activities, the number of consumer complaints from potential car buyers about the ones that do are on the rise. And while well-capitalized dealerships are less likely to deceive than small independents, they aren't innocent. "We've had some big dealers shut their doors for this reason alone," says Mike Marando, a spokesman with the California Department of Motor Vehicles.
For example, last September the California DMV had Shayan Rahbarian, owner of Suzuki of Sacramento, arrested on fraud charges, alleging that he failed to pay Brasher's Auto Auction more than $4 million for 192 new vehicles he bought wholesale and resold to consumers or other dealers.
To help you avoid getting scammed when purchasing a car, we've put together a list of the most common dealer deceptions being perpetrated today, along with what you can do to avoid them.
Scam: Selling Cars Without Proper or Clear Titles
Title fraud is on the rise because of the current recession and is often the result of poor business management on the dealer's part, says Willy Hall, detective supervisor for the Office of the Inspector General at the Arizona Department of Transportation. It mostly happens when struggling dealers without enough money to keep operations going can't pay off the liens on titles for the vehicles they've purchased and sold. Surprisingly, a lot of dealers don't technically own the vehicles they sell. They borrow money from financiers, called "flooring agents," to pay for them. Once a dealer sells a vehicle paid for by a flooring agent, he or she is supposed to pay off the agent to get the title — or clear the lien on the title — and pass it on to the buyer. The problem arises when the dealer doesn't pay off the loan. In such cases, car buyers will return to pick up their license plates and title, only to find that they aren't available and the dealer is nowhere to be found.
The same applies to trade-ins. The dealer is supposed to pay off the lien on a trade-in, but either is unable to pay or pockets the money and shutters the business after pulling this stunt a number of times. As a result, the original owner of the trade-in is left with a car payment on a vehicle he or she no longer owns, and the new owner, who bought the trade-in with a title that has a lien on it, now technically owns nothing.
Warning Signs: "People who say they don't have a title but they can get it — that's a warning sign," says A.D. Reeves, executive director of the dealer services division for the Indiana secretary of state's office.
How to Protect Yourself: You should always ask to see the title and examine it carefully, says Hall. If the dealership owns the car or is on the up and up, it will have the title on hand or be willing to produce it. If it doesn't or won't, then something's not right. And never trade in a financed car with a balance left on the loan. If you can't pay it off for any reason, insist that the dealer put in writing that he will pay off the trade-in within 10 days, recommends Jeff Ostroff, founder of CarBuyingTips.com, whose Web site receives several e-mails a week from disgruntled car buyers. If the dealer is trustworthy, he or she shouldn't have a problem with this request.
Must-See on MSN
Alot of buyers on here make valid points. Many dealers ruin the reputation for alot of dealers. I am in the car business for 8 years now and have been a sales manager for the past year. The business has gotten extremely competetive and is definitly not what it used to be. Internet has changed the game drastically. People come in to my showroom loaded with information and sometimes know more about the vehicle than my sales reps (shame on me). Customers have access to all rebates and incentives. You can see what the dealers cost is and what others are paying for the same car . It is pretty much impossible to "rip off" the average consumer. I truly beleive that if you treat the customer right and show passion and effort to really help someone, it will make you a succesfull sales rep. I actually get at my sales reps when they get too pushy with customers and remind them that this is a big purchase for the average buyer and to be sympathetic to that fact. But you have to admit that the customers are no angels. Alot of times a customer lies MUCH more than the dealer. There is a differene between negotiating and being an aggressive shopper and just lying and being unrealistic. Customers will lie about a price they got elsewhere, lie about the history and condition of their trade, lie about their credit history or that someone they know paid cheaper. I also beleive that customers cornered dealers into using these "tactis" and "scams". People like to play games, like no matter how low of a number I offer, even if im truly losing thousands of dollars and completely blowing the car out, the customers answer is always the same, " O NO THATS WAY TOO MUCH, SUCH AND SUCH OFFERED ME 2000 LESS. You guys tell us to play it straight and just give you the best numbers without the back and forth...that never works, you always feel like we are making thousands of dollars on every transaction. In 2012 the average profit on a new car sale is around $300. Customers will come in with an ad that says "lease for $169" but when their payment goes to 300 because their credit is destroyed they run out screaming "bait and switch" "they are scammers". They will get your best pricing and come back 2 months later expecting the same deal, after the manufacturer changed all rebates and ended certain sales and once again the dealer is lying. When we say this deal is good for a limited amount of time...thats not a scam. I sell Nissan and i have a 1000 rebate until the end of the month. If I quote you today and you come back next month, that price is going to be 1000 more than quoted. Than you tell all your friends that Im a thief and trie dovercharging you. Thats like getting mad at macys because their 30% off sale ended and you didnt make it in time. I know I probobly sound like a bitter sales person but its a two way street. Consumers definitly have a big part in the way this business is these days but you dont ever hear that side of the story because the customer is always right, right. End of rant.
I read your comments and most of you are on the mark, but seriously, the banana brain who wrote this article must still need his mommy to buy his underwear!! all I can say is R U SERIOUS??? since this article is on scams, why don't they talk about the main culprit of "the scams", THE BANKS! If your smart you'll use a credit union instead, banks get their money from the feds at prime, then jack it up to "current market" which usually means they will make anywhere from 1-4% on money thats not even theirs! and they make stupid desicions(ENRON AND FIDELITY come to mind) then get bailed out! Credit Unions always have great rates and use their own customers money to invest. No federal money grubbing goes on, and they care about the communities they represent!
Also, the "bad dealerships" you refer to are what I affectionatly call "pot lots" and you know who you are! the ones that pop up over nite and take over a vacant lot, use big peel off numbers and use catchy slogans like, " drives like new" or "must see to appreciate", and lets face it, because of the"information highway" available to EVERYBODY, you would be doing yourself a dis-service by not researching what you intend to buy. Remember this : It's your hard earned money your playing with, so put emotion on the back burner, and be realistic with yourself and the dealer your working with, "don't go to a car lot with a champagne appetite and a cheeseburger bank account! and if you want a cheap car, thats what you'll get, don't cry "victim" if you did it to yourself.
As salespeople we are considered guilty until proven innocent. What amazes is that we are the only industry where people can see what our margins are. There's many websites devoted to telling the consumer what we pay, what we make, and all sorts of consumer information. Try that on insurance, clothes, flat screen tvs and the like. We spend hours selling a car, to make $100 to $200 and if we are not perfect the survey comes back and we're in trouble with our boss and the auto maker. Most of us love automobiles, and we love people and our job is putting them together. Good listening skills, good product knowledge and no $%&@! That is what makles us successful. Articles like this put a chip on the shoulder of a person who will again treat every salesperson as if they are guilty. Can't you write about something else?
Buyers beware of Jorns Chevrolet Dealer. 1613 Center Street Kewaunee Inc. WI 54216. Peter Beane tried to sell me 2009 Black Corvette that was riddled with corrosion damage from being driven on salt washed roads.
Not only did this guy lie through is teeth when discussing the condition of the car over the phone, explaining that it was like brand new and only driven half of its miles to reach the dealer, but he then let me spend a day off work and $910 on a ticket from Atlanta to Green Bay to come final check the "perfect vehicle" before I would buy it. I clearly asked him twice if there was so much as a scratch dent or any defect on the vehicle and he repeated that it was like brand new. To top things of more when the corrosion damage was spotted he tried to explain that this was normal for a 2009 corvette to be riddled with corrosion and rust. Wow! really! After getting him to put his 2007 model on the hoist to quickly point how an older car with three times the miles looks compare to the rust bucket he was trying to sell me.
Beware of this car VIN 1G1YZ25EX95109860 2009 Z06 Corvette, beware of Peter Beane and Jorns Chevrolet dealer in Wisconsin USA. Sad people operate with such low ethical standards and destroy to industry for people that try do the right thing.
Hopefully no one else falls for his slimy tricks.
Because of my bad credit, I don't have much choice, so I went here, and before I did, I went online and did some research, and the reviews are really good, but now I came to find out, they're the one writing all the fake reviews on it, few complaint here and there. Now I bought the car, and my temp tag is good till Sept 14th, 2011, I called them many times asking them when is my tag will come, they kept lying to me, and finally Sept 15th, 2011, my plant still not here, and my temp tag is expired, and they refuse to extend my temp tag and will not answer my calls, I talked to the sale person that sell me the car, he said is not his job and is not his department, another word is he got my money, and make the sales, now I'm on my own.
Today is Sept 22nd, 2011, still I have no plant and still holding the expired temp tag, I can't drive my car for over a week now, I'm thinking about hiring a lawyer and sue the hell out of these people
DO NOT GO HERE!!
The text of the emaill is below.........
"I said the suv Lexus RX 330 is in a perfect condition, and meticulously maintained. No damage, no scratches or dents, no hidden defects. The engine and transmission work flawlessly. There are no known leaks of any kind and there is no blow by (does not burn any oil and does not smoke) and it is as advertised. All filters and freon were replaced and recharged so yes the AC blows cold. Oil changed, transmission fluid too, it shifts like new. Great handling, engine runs perfect and clean.
The transaction will be fully under MSN Autos surveillance, giving us both security and insurance that nothing will go wrong. They will be the 3rd, objective party involved in the transaction. This way you will actually pay for the suv after you will receive and test it, because MSN Autos will hold the funds and release it to me only after you accept and confirm the delivery. After the suv reaches your address you will have 5 days to test it. Within this period you have to decide if you purchase it or not. If you decide to take it you will have to contact MSN Autos and let them know that, so they can release the payment to me. If you won't like it you will have to ship it back to me within the 5 days and MSN Autos will refund you. The shipping back will be done on my own expense, but I am sure this will not be the case.
If you decide to buy the suv please provide me your full name and the address where you want the suv to be delivered and I will initiate the transaction with MSN Autos. You will receive all the transaction details from them.
Looking forward to doing business!"
Just do your research prior to purchasing. Always check online to find a reputable dealer. Then make sure you have a reasonable budget and an idea of a vehicle you can afford. Also, hopefully you've saved up a good amount for a down payment. Finally, don't fool yourself into thinking you can purchase a vehicle at a good price if you have horrendous credit or none at all. Do your 'homework' first so you're not sucked into a 'scam'.
I just purchased a new vehicle in March. I had plenty for down payment, have great credit, and went to a good dealer knowing what I wanted and what I was willing to pay. We worked out a reasonable deal we both agreed on. I left with exactly the car I wanted and the dealer made a fair sale.