Consumer Fraud Protection
Tennessee law provides protection against deceptive and unfair business practices. One of the most common complaints concerns Auto dealer fraud. Steve North was recently asked by a Nashville television station to list things that in his experience consumers should watch for in buying an automobile as it relates to deceptive, fraudulent or unfair practices. He prepared the following list of things he had seen in representing consumers against Automobile Dealers. Not all of these things are necessarily illegal or deceptive, but they are things of which consumers should be aware.
Some of the most common examples of consumer fraud include:
•· SPOT DELIVERY: Typically an unscrupulous dealer will tell a customer that their financing had been approved and propose a deal that includes financing and a certain monthly payment. The customer will agree to the deal and sign over his trade-in and take delivery of the new car. Sometimes there is a clause in small print that says that the deal is contingent on financing being approved. A few days later the dealer will call the customer and tell him that he must return the car because financing was not approved. The dealer will then offer another deal with higher rates, higher price or longer terms. When the customer balks and wants to undo the deal, the dealer refuses saying that the trade in has already been sold. My advice: Find that clause and mark through it and have the dealer initial the change before you sign anything. If the dealer won't agree to the deletion, go somewhere else.
•· WATER DAMAGED VEHICLES: In the wake of Katrina a large number of vehicles that have been totaled because of flooding have found there way into the used car market. My advice: A. Never buy a car that has been in a flood. B. Get a written representation from the dealer that the car had never been in a flood. C. Do a complete inspection to find hidden evidence of water damage.
•· DOC FEES, PROCESSING FEES: Many dealers, after a deal is made, automatically add up to $500 to their bottom line and call it a "Doc Fee" or "Processing Fee". These are not fees at all, but simply a device to add additional profit after a deal has already been made. My advice: Either only deal with dealers who tell the truth about the price of their vehicles or refuse to pay the "fee". Dealers will sometimes say they have to charge the fee on all transactions. If so, require that the dealer reduce the sales price by the amount of so-called "fee".
•· BACK-END PROFIT: Many people do not understand that when the dealer handles the financing, many times a portion of the interest paid comes back to the dealer. In order to maximize the profit on a transaction it is in the interest of the dealer to get a customer to agree to as high an interest rate as possible. My advice: Ask the dealer how much his "back end profit" is and take that into account when making the deal. Also, check with your bank and see what kind of interest rate they would charge you. You can negotiate the interest rate with the dealer.
•· FORGED OR FALSE CREDIT APPLICATIONS: Unscrupulous dealers will sometimes make false statements about a customer's income or job situation in order to qualify a customer for a loan that the customer cannot reasonably expect to pay. My advice: Before you sign any credit statement or application, be sure all of the blanks are filled in and are accurate.
•· LAUNDERED TITLES: If a used car has been totaled and rebuilt, the title should show "Salvage" or "Re-built" or similar words. My advice: Ask to see the title before you agree to buy and obtain a "Car-Fax" report.
For Assistance
To contact an attorney at North Law Office concerning a consumer protection matter, call (615) 860-7644 or contact us online.
North Law Office
1215 Gallatin Pike
South Madison, TN 37115
We represent clients throughout Tennessee, including Madison, Nashville, and Davidson County.
