Top 10 Maryland Dealership Schemes
Misrepresentation and fraud happen all the time at many new and used car dealerships in credit applications, lease agreements and finance contracts. The lawyers at Whitney, LLP sue car dealerships across Maryland, and represent clients who live in Maryland, or who came from out of state, often from DC or Virginia, or who purchased a vehicle online from a dealership in Maryland. Here are the 10 most common schemes at Maryland car dealerships that we help our clients with.
The Top 10 Illegal Dealer Practices in Maryland that Whitney, LLP helps car buyers are:
- When financing is not approved but the dealer sells your trade or keeps the down payment;
- Forgeries on finance or lease agreements changing monthly payments, loan amounts and interest rates;
- Price increased when financing through Credit Acceptance;
- GAP and Extended Warranty is paid for but not purchased;
- False online price advertising, price is increased at the dealership;
- Rental history/commercial use of a used car is not disclosed;
- Lying on a credit application, often inflating income or improving job title;
- Hidden damage/salvage title;
- Odometer fraud; and
- Selling a car without having the title.
Read more below about each one of these scams. Our lawyers help unwind bad deals and recover compensation for car buyers, at no out of pocket cost to the buyer. We offer Free Consultations.
Here are reviews from what some of our past clients have said about us, and here are some of our past settlement results in claims and lawsuits against car dealerships.
Common Types of Auto Fraud at Maryland Dealerships
We successfully represent car buyers in a variety of claims. The scams listed below are the Top 10 most common that we see Maryland dealerships committing.
Spot Delivery Violations – When Financing is Not Approved.
- When financing is not approved, the dealer must:
- return the trade-in,
- return 100% of the down payment, and
- not force you to buy another car or pay a higher price/higher interest
Spot delivery is when a car dealership lets a customer drive their new car off the lot, but financing has not been approved. Maryland has strict laws with spot delivery. If financing is not approved, the dealership has four days to provide written notice to the customer. Dealerships often sell the trade-in before financing is approved and force the customer to buy a new car to replace the trade in. Dealers also often illegally keep down payments and charge bogus mileage, depreciation or inspection fees when financing is not approved.
Forgery in Finance and Lease Contracts
Our lawyers find forgeries in about 1 out of every 5 lease and finance contracts we review. This high percentage indicates forgery is a widespread practice in Maryland.
Signs of car contract forgery include:
- the monthly payments are higher or lower than what was agreed to at the dealership;
- the interest rate is different;
- the loan amount on your credit report is higher or lower than agreed to; and
- GAP Insurance and extended warranty coverage you paid for is not in effect when you make a claim.
The most likely way these changes happen is if a customer’s signature is forged on a separate set of contract paperwork, and the forged contract is sent to the finance or lease company
Read about our $50,000 settlement in a lawsuit involving forgery and fraud allegations against Sheehy Hyundai in Waldorf, MD, when our client’s monthly payment was increased by $24/month without her permission using a second contract she never signed. Of course, all cases are different and past performance is not a guarantee of future results.
Increased Price after Financing With Credit Acceptance
If you financed a car through Credit Acceptance and the dealer increased the price, call Whitney, LLP. In a similar case, we recovered the price increase of approximately $5,000 and obtained additional compensation.
Buyers with low credit scores often have no choice but to finance through Credit Acceptance. Dealerships often increase the price of a car once they realize that a customer is going to finance through Credit Acceptance in order to pass along the high fees that Credit Acceptance charges the dealership for financing. However, Maryland law is very strict and prohibits both dealers and banks from passing these finance charges on to car buyers.
GAP Insurance / Extended Warranty Was Secretly Cancelled
Dealers may charge car buyers for LoJack, GAP, Extended Warranties, and Pre-Paid Maintenance, then simply pocket the money without providing the protection that was paid for. For example, a Maryland Nissan dealership charged a woman $4,100 for LoJack that was never installed, and dealers often simply keep the GAP money and hope that customers do not find out.
Many car buyers have an accident and call their GAP Insurance company to make a claim, or their car needs a repair and they call the service contract company to make a claim. When the customer is told that there is no policy in effect, or that their policy was cancelled, that is a sign that the dealership pocketed the money. If this happens, you can recover the money you were tricked into paying.
False Online Price Advertising, then Increasing the Price
Dealers must honor the advertised price. Maryland has strict laws and regulations that require dealers to honor advertised prices.
Many car buyers are lured into a dealership by a low price advertised online. When they arrive, the price is much higher and there are often inflated “inspection” or reconditioning fees added to the price. Take a screen shot, or print, the online price and terms, and call Whitney, LLP to take action to get back the money you paid over the advertised price. Even if you signed the contract with the inflated price, you still have legal rights.
Failure to Disclose a Used Car’s Rental Car or Commercial Use History
Maryland law requires dealers to disclose if the car they are selling was a rental car, demo vehicle, or taxi. If this is not disclosed, you may be able to unwind the deal and recover compensation. Buyers often find they were sold a rental after purchasing, and then running a CarFax later. Many buyers do not want a rental because they have been used harshly, not taken care of, and were in accidents before they were sold.
Inflating Income on Credit Applications
Inflating customer income and creating false job titles, and decreasing monthly rent or mortgage payments on the credit application is a common practice. Dishonest finance managers and dealerships do this to obtain financing approval for a loan amount greater than a customer should be approved for. When this happens, customers get the car but are stuck with a higher payment they cannot afford. A red flag is when the car payment seems to be too high to pay. The victim of the credit application fraud has serious legal rights, and may be able to return the vehicle and recover compensation.
Hidden Damage and Salvage Titles
Used cars are always at risk of a hidden problem, but Maryland law requires dealers to disclose “material facts.” Material facts are an important piece of information that a consumer would consider important to know before buying. Of course, accident history, hidden damage and salvage titles are important. When these are not disclosed, you have legal rights.
Only the worst of dealerships engage in odometer fraud. The true high mileage is usually discovered when the buyer takes the car in for service and is informed that the mileage is off, or that there is much more wear and tear on the car than there should be also. Customers also discover odometer fraud when they look at an accurate CarFax and see the true mileage.
If you have been the victim of Odometer fraud, Whitney, LLP can help.
Selling a Car Without Having the Title
It seems obvious that a dealer has the title if they are selling a car to a buyer, but very often, dealers have not paid off the car they sell to a customer. This is an illegal practice that hurts buyers when they are not able to register the car due to not having the title. These fraudulent deals can result in compensation for the buyer, as well as unwinding the deal.
Forced to Purchase GAP, Extended Warranty or Pre-Paid Maintenance for Financing Approval
Finance managers often lie and falsely tell buyers that the “bank requires you buy these to qualify for financing.” This is false. Dishonest finance managers will try to sell aftermarket products that have high margins and large commissions such as GAP, extended warranty plans, vehicle service contracts, rust protection, paint protection, dent and ding repair and pre-paid maintenance plans. Banks do not require customers to buy these after market products, and these products are not required to be purchased for financing to be approved.
Being required to buy these expensive products can add thousands to the price, and hundreds to a monthly payment. If you were tricked into buying these products based on false representations, Whitney, LLP can help.
Whitney, LLP’s Attorneys Represent Car Buyers
If you were a victim of any of these schemes, or a dishonest car dealership deceived or cheated you, call Whitney, LLP today for your Free Consultation. Dealerships often ignore customer complaints when the customer is not represented by an attorney, or settle claims for far less than they are worth.
At Whitney, LLP, our lawyers can examine your car contract for fraud, at no cost to you. We may be able sue the car dealership that deceived you and either unwind the deal, recover compensation, or both. For your Free Consultation, call Whitney, LLP at (410) 583-8000. There are no out-of-pocket fees or expenses if we accept your case.