Though dealerships that handle both used and new cars have heavy regulations that they must operate under, this does not mean that fraud never happens. Quite the opposite: many dealers engage in fraudulent behavior in order to get an edge over competition in a harsh market.
It is important to understand the techniques that might actually amount to fraud or fraudulent behavior when coming from an auto dealer.
Examples of fraud
Auto dealer fraud can pose a major issue to anyone at all, and any auto dealer can engage in it. For example, one of the most common tactics is the “bait and switch”. In this tactic, the dealer will advertise a vehicle at a price often unrealistically low. They then tell interested customers that this vehicle has already gotten snapped up by another customer, and will use the fear of missing out to try prompting the potential customers into buying another, more costly vehicle instead.
Used car dealers can commit fraud, too. They may sell cars previously declared total losses, or tamper with the odometer to make it seem like a car has driven fewer miles than it actually has. States without rigorous regulations see this sort of crime often, and it is particularly egregious due to the safety concerns that driving a previously totaled car can bring about.
Forgery as fraud
Forgery also happens. For example, the dealer may send the bank a set of documents with a lower interest rate, higher selling price and forged signatures. The monthly payment of the car owner does not change due to the interest rate, but they will experience a nasty shock when they try to trade in or sell the car and discover that they owe the bank excessively due to the loan amount.
Car owners who come across these instances of fraud can take the dealer to court. It is also possible to seek compensation for financial damages done.