Matthew Oliver
Trust can be hard to come by for many car buyers. In fact, nearly 76% of car buyers say they don’t trust dealerships to be honest about a vehicle’s price. And while some sales tactics may simply feel pushy or frustrating, others cross a very real line. And that means auto dealer fraud.
Auto dealer fraud happens when a dealership intentionally misleads a customer during the sale, lease, or financing of a vehicle. This can include lying about a car’s history, inflating prices, or sneaking in extra fees or services without consent. Fraud is different from hard selling—aggressive tactics may be annoying, but they’re not illegal unless deception is involved.
In this article, we’ll talk about what auto dealer fraud looks like, how it differs from legal sales techniques, the most common red flags, and what you can do if you think you’ve been a target.
Common Types of Dealer Fraud
Buying a car should be exciting, but for many, it’s filled with stress and suspicion. A recent survey found that 34% of buyers felt pressured to purchase add-ons they didn’t want, while 30% discovered hidden fees after agreeing on a price. Another 28% said they felt the salesperson was trying to "trick" them into a deal, and 29% walked away from a dealership entirely because they didn’t trust the pricing.
These experiences often point to more than just pushy sales tactics—they can signal dealer fraud. Here are some common examples:
- Odometer Rollback: This involves tampering with a vehicle’s odometer to show fewer miles than it has actually traveled, making the car seem less used and more valuable. A recent class action lawsuit claims that Tesla altered odometer readings in some of its electric vehicles, showing more miles driven than the cars had actually traveled—allegedly to limit or avoid repair coverage tied to mileage-based warranties.
- Bait-and-Switch Advertising: Dealers may advertise a vehicle at an attractive price to lure customers in, only to claim that the advertised car is no longer available and push a more expensive model instead.
- Misrepresentation of Vehicle History: This occurs when a dealer provides false information about a car’s past, such as concealing previous accidents or title issues, to make a sale.
- Financing Scams (e.g., Yo-Yo Financing): In this scheme, a buyer is allowed to take a car home before financing is finalized. Later, the dealer claims the financing fell through and pressures the buyer into a less favorable loan.
- Hidden Fees or Forged Documents: Some dealers add unauthorized charges to the contract or alter documents without the buyer’s knowledge, increasing the overall cost.
Red Flags to Watch Out For
While the FTC (Federal Trade Commission) is working to cut down on auto dealer fraud, it does, unfortunately, still happen. An estimated 100,000 complaints are made against dealerships each year. Thankfully, there are some things you can do to prevent yourself from being the next auto dealer fraud victim. And it all starts with being aware of some big red flags.
Here are a few warning signs to watch out for during the buying process:
- Inconsistent paperwork: If numbers, terms, or vehicle details change between documents, or don’t match what you discussed, this could point to something dishonest. Always review every page before signing.
- High-pressure sales tactics: If a salesperson is rushing you to sign or pushing add-ons like prepaid maintenance without giving you time to read the paperwork, take a step back. Legitimate deals should allow time for questions.
- Deals that seem “too good to be true”: Be cautious of low prices, zero-percent offers, or big promises that come with unclear fine print. Some dealers use these to bait buyers before switching the terms.
- Lack of transparency: If the dealer avoids giving you information about the financing terms, vehicle condition, or history, consider walking away. A trustworthy seller won’t hide important details.
How to Protect Yourself
Auto dealer fraud isn’t always easy to spot. Thankfully, there are several ways you can protect yourself before and during the buying process.
Start by doing your homework. Research the dealership online to read customer reviews and check for past complaints. Stick with dealers that have a good reputation and clear communication. Before stepping onto the lot, use services like CARFAX or AutoCheck to review the vehicle’s history report. This can help you avoid cars with hidden accident damage, title issues, or odometer rollback.
It’s also smart to understand the financing side of the deal. Know how APRs (annual percentage rates) work and how they affect your total loan cost. Ask for clear breakdowns of monthly payments, interest, and loan length. Learn about lemon laws in your state in case the car ends up having serious issues after purchase. And consider whether GAP insurance makes sense—it can help cover the difference between what you owe and what the car is worth if it’s totaled.
Finally, never sign anything without reading it carefully. Take your time. Ask questions. And if something doesn’t feel right, don’t be afraid to walk away. Your signature should never come with regrets.
What to Do If You Suspect Fraud
If you believe a dealership misled you or committed fraud, start by gathering all documents related to the sale. This includes contracts, emails, texts, and the vehicle history report. Review them closely to confirm any inconsistencies.
Your first step should be contacting the dealership directly. In some cases, they may correct the issue without further action. If that doesn't help, file a complaint with your state attorney general’s office, the Department of Motor Vehicles (DMV), or the Federal Trade Commission (FTC). These agencies investigate consumer complaints and may take action if a pattern of fraud is found.
If the problem continues or you're facing financial loss, it may be time to speak with a consumer protection attorney. Legal counsel can help you understand your options and pursue action if needed. You don’t have to handle auto dealer fraud alone—support is available.
Protect Your Purchase—and Your Wallet—from Auto Dealer Fraud
Auto dealer fraud is more common than many buyers realize—and it goes beyond pushy sales tactics. From odometer rollbacks to misleading financing terms, these deceptive practices can lead to financial stress, surprise fees, or even unsafe vehicles. In this article, we covered what auto dealer fraud looks like, common red flags, and steps you can take to protect yourself.
Doing research, understanding your rights, and carefully reviewing every document before signing can go a long way toward avoiding these situations. And if you’ve already purchased a vehicle and feel stuck with a high monthly payment, auto refinancing with RateWorks may help lower your costs and give you a fresh start.
Staying alert, informed, and ready to ask questions can make all the difference. Car buying should be about finding the right fit—not second-guessing the fine print. Let RateWorks help you stay in control of your car-related expenses. Get a free quote today.
