Packing Deals and Selling Lemons: Common Car Dealer Scams to Watch Out For

Between the complicated paperwork, the excitement of getting a new car, and the salesperson’s steady flow of reassuring smooth talk, it’s easy to get confused and fall prey to a malicious scam when purchasing a used vehicle. In order to avoid becoming a victim, it’s important to be able recognize red flags of auto dealer fraud as they come up. With this article, our Baltimore consumer fraud lawyers will explain two of the most commonly-used auto dealer scams in an effort to help consumers make informed decisions – and avoid getting ripped off.

Scam #1: Packing Contracts with Unwanted Features

Have you ever gone into a store intending to make a basic, no-frills purchase, only to wander out with a dozen fancy features you never knew you wanted or needed? If so, you may have already experienced “contract packing” or “deal packing” first-hand.

Deal packing is one of the most common scams among car dealerships in Baltimore. It occurs when a dealer deceptively includes “free” add-ons in a contract, often low-value items like paint protection, rust-proofing, warranties, and GAP insurance. The salesperson frames their speech to make it seem as though the add-ons are included with the car, when in fact, they are actually optional. (In some cases, the dealer might tell the buyer he or she can’t get approved for financing unless they buy the extra features.) As a result, the consumer winds up paying more than they originally would have.

You can avoid falling victim to a deal packing scam by reading the contract carefully before you sign. We know contracts don’t exactly make for exciting literature, but it’s always important to review the fine print. In addition to scrutinizing the contract to make sure it doesn’t include any items you don’t actually want, you should ask the dealer to tell you the real cost of the vehicle, the finance charge, the annual percentage rate, the amount being financed, and the total sale price.

If there’s anything in the contract you don’t fully understand, don’t feel bad about changing your mind. It’s your wallet, not the salesperson’s. You’re entitled (and encouraged) to spend as much time on research as possible. Take your time and do your homework – the dealership will still be there tomorrow.

Scam #2: Selling Lemon Cars with Hidden Defects

It’s one thing to use “puffery,” or general boasting, about a product for sale – it is almost to be expected at a car dealerhsip. It’s another matter to conceal a vehicle’s defects, which, if known, would dissuade the consumer from making the purchase. A vehicle which is discovered to be defective after being purchased is referred to as a “lemon.”

Maryland enforces strict lemon laws designed to protect consumers from purchasing unsafe or unusable vehicles. These laws apply to cars, motorcycles, and light trucks which:

• Are registered in the state of Maryland.
• Have been driven less than 18,000 miles.
• Have been owned for less than two years.

All three of these statements must be true in order for state lemon laws to apply. Where applicable, lemon laws provide that dealers (or manufacturers) have 30 days to fix any defects, beginning from the time the consumer sends a complaint to the manufacturer via certified mail. If neither the manufacturer nor dealer is capable of making satisfactory repairs within 30 days, the consumer may be entitled to a refund or replacement car if the defect involves one of the following issues:

• Steering defects and brake defects which both (1) could not be fixed with the first repair attempt, and (2) caused the car to fail a safety inspection in Maryland.
• Any issue which “substantially impairs the use and market value of the vehicle that was not corrected in four repair attempts.”
• Any issue which both (1) “substantially impair[s] the use and market value of the vehicle” and (2) has caused the car to be out-of-service for a total of at least 30 days. The 30 days need not be consecutive, only cumulative.

You can reduce your chance of accidentally purchasing a lemon car by following these tips:

• Do your homework. There are countless websites for comparing and researching new and used vehicles, many of which include dealer invoice prices and quality ratings. Consumer Reports is regarded as a trusted and reliable source of information.
• Make sure to take the car for a test drive. Test driving is always a good idea, since you might discover you simply don’t like the way the car handles – but it’s especially important for used vehicles, whose histories aren’t always represented accurately by salespeople.
• Always get a warranty history before agreeing to a purchase. Every dealership has a computer system capable of retrieving warranty histories by using the vehicle identification number, or VIN. The report that comes up should include any vehicle repairs which were covered by the manufacturer’s warranty.

If you think you’ve been a victim of auto dealer fraud, you may be entitled to compensation. Contact the consumer fraud attorneys of Whitney, LLP at (410) 583-8000 to set up a free and confidential legal consultation.