Auto Dealer Fraud in South Carolina

Mike Kelly — Tue, 19 May 2009 18:16:07 GMT

“Auto dealer fraud” is a term that describes deceptive and unlawful practices used by automobile dealers, at almost any stage of the vehicle purchase process – from advertising, to negotiation of vehicle pricing and financing terms. This fraud is plaguing South Carolina and consumers are being taken for hundreds, and often thousands, of dollars.

While a profitable operation is reasonable and necessary, these scams are adding millions of dollars each year to the profits of car dealers at the expense of consumers. South Carolina’s Regulation of Manufacturers, Distributors and Dealers Act provides that dealers shall not engage in bad actions which are arbitrary, in bad faith, or unconscionable. See S.C. Code Ann. § 56-15-10 et seq. Violations of the Dealer Act may occur when dealers pressure consumers into purchasing additional products in the form of extended warranties, guaranteed auto protection insurance (GAP), and car care plans on the premise that such products are necessary to obtain the car or to successfully finance the purchase. These additional products are often unnecessary and such tactics are in clear violation of the Dealer Act.

The Dealer Act provides that consumers who may have been subject to these violations may recover double their actual damages, punitive damages, and reasonable attorneys’ fees. Auto dealer fraud differs from South Carolina’s Lemon Law, which is contained within S.C. Code Ann. § 56-28-10, et seq. While both involve motor vehicles, auto dealer fraud cases are very different from Lemon Law cases. In auto dealer fraud causes, improper tactics used by a car dealer during the vehicle sale process are the focus, while lemon law cases arise from problems or defects with the vehicle itself.

South Carolina’s Lemon Law provides no recourse against a dealer if a new vehicle contains a defect that impairs it use or lowers its market value substantially. Rather, the manufacturer is provided with the opportunity to repair the vehicle. If repair attempts fail, the consumer is then required to participate in any arbitration procedure proposed by the manufacturer before a refund is possible. Furthermore, the Lemon Law does not cover any defects that do not show within the first 12,000 miles of the vehicle, or the first 12 months, whichever occurs first.

Public Citizen, a national non-profit public interest organization, provides the following tips to avoid falling prey to auto dealer scams:

1) Never take “spot delivery” of a vehicle – do not drive it off the lot until you are absolutely sure that the financing is done and sealed. Shop during the weekdays when banks are open and be sure that the loan is approved by a bank in its final form before driving away with the vehicle. Most importantly, do NOT sign any form which allows a dealer a “right of recission” to change loan terms after you have taken possession of the vehicle.

2) Shop for the best loan (and loan terms) as carefully as you shop for the best sticker price. Shop around for the best deal and be sure of: 1) the exact number of payments; 2) the total cost of your credit in dollars; 3) the name, address and contact information for the bank that holds the loan; and 4) whether there is a balloon payment at the end.

3) Collect a second opinion on the loan and be ready to use outside financing from a credit union or bank. Before you buy, ask a credit union or your bank what a loan for that vehicle would cost. Also, get a copy of your credit report from a rating agency, and know where you stand. Compare the dealership’s offer with your independent loan. If the independent loan is preferable, do not tell the dealership that you have arranged for other financing until after you have negotiated the sticker price and are on the verge of closing the deal.

4) Make a budget and stick to it. Before you go to the dealership, use what you know about the sticker price and loan to figure out the monthly payment and loan schedule you can afford.

5) Plan to go away and come back several times before you buy. Stop the transaction if you feel pressured or confused. Just walk away, and stick to your guns.

For more information, please visit www.autodealerscam.org

Originally posted at InjuryBoard by Mike Kelly

Florence-Myrtle Beach Personal Injury Lawyer - lemon law

Auto Dealer Fraud in South Carolina