Dealership Reported My Car Stolen – Our Client Won $190,000

Whitney, LLP obtained a $190,000 settlement for a car buyer after our client called us and reported that a ‘car dealership reported my car stolen’ and had felony theft charges filed against her. The dealership had not followed Maryland’s Spot Delivery law, and it was still the lender on her contract. She had not stolen anything and was entitled to keep the car.  However, the dealer’s illegal actions eventually cost them $190,000 after Whitney, LLP filed a lawsuit against them to help our client fight back.

If a dealership reported your car stolen after financing fell through, you have legal rights. A false theft report can lead to claims for malicious prosecution, illegal repossession, debt collection violations and violations of Maryland’s Consumer Protection Act, which can result in significant compensation for the dealer’s customer. 

Whitney, LLP’s Maryland auto fraud lawyers have filed arbitrations and lawsuits against dozens of new and used car dealers across Maryland. Our cases involve spot delivery violations, unauthorized credit pulls, wrongful repossession, harassment, forgery and fraud.

Call us now at 410 583 8000, or use our Quick Contact Form. for your Free Case Evaluation and to discuss your potential case.

Click here to read about our $290,000 verdict against Carzlane, Inc. and Ron’s Automotive, and summaries of 50 Maryland car dealer complaints, lawsuits and arbitrations our firm has handled.  Of course, all cases are different, and past results do not guarantee future results.

Watch our YouTube Channel to learn about the consumer rights cases we handle and some of our results.

dealership reported my car stolen

How the Car Purchase Started

Our client bought a new car from a Maryland car dealership. It was the first time she had ever financed a car.  Prior to the actual purchase, she had contacted the dealership multiple times. However, each time she went to the dealership, the price and monthly payments always increased. She decided she would not return until she received confirmation in writing of what her terms would be and that she had been approved for those terms.

Finally, the salesperson texted back, confirming a specific monthly payment with no down payment, and stating “financing approved.”

Relying on that promise, she went to the dealership and signed the paperwork electronically on her phone. The screen was small and the documents were hard to read. The paperwork included a Retail Installment Sale Contract which listed the dealership itself as the “Seller-Creditor.”

The Hidden False Down Payment

Only after she finished signing did the salesperson tell her the paperwork showed a down payment. However, she had not paid any money down. Instead, the dealership had put that number on the contract to get the loan approved.

The salesperson then told her that if the lender called her, she should confirm the down payment but not say the dealership had provided it.  When the lender called her a few days later, she told the truth, and did not lie.

The Dealer Demanded She Lie to the Bank

Nine days after the sale, the dealership started texting and calling. The salesperson said the lender would not finance the loan if our client did not lie to the bank and tell them the false information.  Our client refused to lie and told the dealer she would not lie to the lender.

That same day, she started getting alerts about new hard inquiries on her credit report. The dealership admitted it was running her credit with other lenders. As we explain in our blog, a dealer cannot run your credit without a permissible purpose.

The salesperson and the sales manager then called her together, and tried to demand that she return and sign a new contract, which she refused to do.  Instead, she asked them to send the new contract so she could read it first. They refused.

Dealer Reported the Car Stolen in a False Theft Report

Over the weekend, our client researched her situation. She learned about Maryland’s Spot Delivery law from reading Whitney, LLP’s blog on Spot Delivery, and realized the dealership had not followed it.  She also saw that the contract named the dealership as the lender. That meant she could simply make her payments to the dealership.

When she told the salesperson she planned to just make her payments to the dealership, the finance manager claimed she did not have a valid contract.  He insisted she had only two choices: sign a new contract or bring the Jeep back.

However, when a Maryland car dealer does not comply with Maryland spot delivery law and does not provide the required notices, that dealer remains the lender, and the customer can make monthly payments directly to the dealership. Car dealers do not like this because they do not want to act as the lender. Many times, car dealers behave illegally when they find themselves in this situation and try to force the customer to return the car or take other action that the customer is not required to do.

After our client asserted her rights under Maryland’s Spot Delivery Law and refused to return the car, the finance manager falsely reported the car stolen. An arrest warrant was issued for our client’s arrest.  When a police officer called our client to inform her of the warrant, she contacted Whitney, LLP and explained to us that a dealership reported my car stolen, and requested our legal help immediately.

Whitney LLP’s attorneys found her a criminal defense attorney to handle the criminal charges, and those charges were dropped within several days.  As soon as we reviewed the contract, and our client explained her story and showed us the text messages, we realized the dealer had violated multiple laws and had caused our client serious harm.

Maryland’s Spot Delivery Law, Explained

A “spot delivery” happens when a dealer lets you drive a car home “on the spot” before a bank has approved your financing. When the dealer later tries to pull you back in to sign a worse deal, it is often called “yo-yo financing.” Maryland’s Spot Delivery law, found at Maryland Transportation Code § 15-311.3, sets strict rules for these sales.

Under the law, a Maryland dealer must:

• Give the buyer a separate written notice, using the exact wording in the statute, explaining that financing is not final. The dealer and buyer must both sign it before the buyer drives away.
• Notify the buyer in writing within 4 days of delivery if the lender does not approve the financing.
• Return the buyer’s full down payment, trade-in, and all fees if the sale is cancelled, without charging for mileage or use of the car.

Only after the dealer gives that written notice does the buyer have to return the car, within 2 days. A buyer cannot waive these rights, and a dealer that breaks the law commits an unfair and deceptive trade practice under Maryland’s Consumer Protection Act.  Many Maryland car dealers routinely violate Maryland’s Spot Delivery law, and Whitney, LLP routinely sues car dealers for their illegal actions. 

In our client’s case, the dealership never gave her the required notice before delivery. It never sent written notice within 4 days that financing was denied. Instead, it waited about nine days and then tried to pressure her into a new contract.

Because the dealership skipped these steps and did not follow the law, it could not use the Spot Delivery law to demand the car back. The original contract named the dealership as the lender, so the contract stayed in place. Our client had every right to keep the car and make her payments to the dealer.

Read more about how we handle these cases in our blogs on a spot delivery lawsuit filed in Parkville and a $30,000 settlement with Car Haven.

Other Laws the Dealership Broke

Whitney, LLP filed a lawsuit on our client’s behalf in Maryland circuit court. Besides the Spot Delivery law, the lawsuit alleged the dealer violated multiple Maryland and federal laws, including but not limited to:

Maryland Consumer Protection Act. The Consumer Protection Act bans false or misleading statements and hiding important facts from consumers. The dealership told our client she was approved with no money down while hiding that it had faked a down payment, and later made representations about her being required to return the car and making payments directly to the dealership.

Maryland Consumer Debt Collection Act. This law protects people from abusive tactics by anyone trying to collect a debt, including a dealer that is the lender on a car contract. A collector may not threaten criminal charges without a real basis, use obscene or abusive language, harass a consumer, spread damaging information about her, or claim a right it knows does not exist.

Fair Credit Reporting Act (FCRA). A business may only pull your credit for a “permissible purpose.” The dealership ran her credit with other lenders after the sale, without her permission, while her contract was still in effect. Read about our $60,000 settlement after a dealer ran a customer’s credit 24 times.

Malicious prosecution. You can sue someone who starts a criminal case against you without probable cause and with an improper motive, if the case ends in your favor. Here, the dealership filed false theft charges to get the car back, not because a crime happened. The charge was dismissed.

Breach of contract and conversion. Because the dealership was the lender, it had to honor the contract. Taking the car back when she was not behind on payments breached the contract. Taking someone’s property without a legal right is called “conversion,” the civil version of theft. Learn more about wrongful repossession in Maryland.

Daniel Whitney, Jr. and Daniel Whitney of Whitney, LLP

$190,000 Settlement After a False Theft Report

The case resolved with Whitney, LLP recovering a $190,000 settlement for our client.  The settlement took into account the emotional distress caused to our client and the dealership’s illegal behavior.  

This case shows how far some dealers will go when a financing deal falls apart, and how badly things can go wrong when they involve the police. A dealership cannot use a false stolen vehicle report as a shortcut to repossess a car. When it does, the buyer may have powerful claims under Maryland and federal law and may be able to recover significant compensation.

We have found that many Maryland car dealers take illegal actions against their customers. 

FAQ: What to Do After a Dealership Reported My Car Stolen

Can a dealership report my car stolen if financing falls through?

A dealer cannot legitimately report a car as stolen when the buyer took it home under a signed sales contract and has not broken any laws. If the dealer did not follow Maryland’s Spot Delivery law, including sending written notice within 4 days that financing was denied, the original contract may still be in force. A false theft report in that situation can give the buyer claims for malicious prosecution and debt collection violations.

What should I do first if I learn about a false theft report?

If there is a warrant or criminal charge, contact Whitney, LLP or a criminal defense lawyer right away. Do not ignore calls from police, but let your lawyer handle communication about the charge. Avoid driving the car while it is reported stolen, since you could be stopped at gunpoint or arrested.

Should I return the car to the dealership?

Talk to a lawyer before you do. Your rights depend on whether the dealer followed the Spot Delivery law and what your contract says. If the dealer is the lender on your contract, you may have the right to keep the car and make payments.

What should I save?

Keep every text, voicemail, email and call log from the dealership. Save your full contract packet and all documents the dealer gave you. Screenshots of texts from the salesperson were key evidence in our client’s case.

Should I check my credit report?

Yes. Dealers that try to force a new deal often run your credit with multiple lenders without permission. Pull all three reports for free at AnnualCreditReport.com, because not every inquiry appears on every report.

What if I was arrested or handcuffed?

Being arrested or detained because of a false report can add to your damages. You may also want to read about our false imprisonment cases.

What Happens When You Contact Whitney, LLP?

1. Our intake staff gathers the initial information. After you call or submit an inquiry, our staff will request details about your situation, including a timeline of events. Helpful documents include your sales and finance contract, texts and voicemails from the dealership, any police report or charging documents, and your credit reports.
2. An attorney reviews the case. Once we receive the requested information, we can generally evaluate the matter and get back to you within about a week. Timing may vary depending on the information needed.
3. We discuss potential representation. If the matter is a fit for our firm, we explain the next steps and answer your questions about moving forward.
4. False theft report case evaluations are free. For accepted cases, attorney fees and expenses are paid from the recovery, with no out-of-pocket expenses.
5. Consultations and case preparation can be handled remotely, including through Zoom.

Areas Served

Whitney, LLP represents car buyers against new and used car dealers across Maryland, including in Baltimore City, Baltimore County, Anne Arundel County, Howard County, Harford County, Montgomery County, Prince George’s County, Charles County, Carroll County, Frederick County, Washington County, Allegany County, Garrett County and the Eastern Shore.

Annapolis, Baltimore, Towson, Glen Burnie, Columbia, Ellicott City, Bel Air, Rockville, Silver Spring, Bowie, Laurel, Waldorf, Westminster, Frederick, Hagerstown, Cumberland and Salisbury are just some of the areas where we represent clients taken advantage of by a car dealer. We also represent out-of-state buyers, including from Virginia, Washington, D.C., Pennsylvania, Delaware and West Virginia who bought from a Maryland dealership and had problems.

False Theft Reports by Car Dealers – Whitney, LLP

If a dealership reported your car stolen, threatened criminal charges, or repossessed your car after financing fell through, Whitney, LLP’s auto fraud attorneys may be able to help. Our attorneys represent consumers across Maryland in claims involving spot delivery violations, false theft reports, malicious prosecution, wrongful repossession, credit misuse and financing fraud. You can also request a Free Car Contract Review.

Call us now at 410 583 8000, or use our Quick Contact Form for your Free Case Evaluation and to discuss your potential case.

An attorney-client relationship is created only once a representation agreement is signed. Prior results are not a guarantee of future results, and all cases are different. This blog does not provide legal advice.