The rumor mill is working in Boulder, Colorado. Auto industry sources say that Colorado was one of several states to receive water-damaged cars from the East Coast following Super Storm Sandy. To avoid auto fraud, Tim Jackson, president of the Colorado Automobile Dealers Association, advises consumers to look out for stains in the car, mud or dirt under the hood and musty odors inside the car’s cabin, because they may reveal water damage.

What is auto fraud?

Auto fraud is a broad term that describes a wide variety of illegal conduct and dealership scams. Usually car-dealer fraud is only discovered after consumers have lost millions of dollars in unnecessary repairs and bad loans. Some of the most common illegal practices executed by dealers include:

• Hiding prior damage or a lemon — To avoid this scam, it is crucial to hire a reliable mechanic to inspect the car and review its repair records.
• Bait-and-switch — If the advertised is too good to be true, then it probably isn’t.
• Adding unwanted extras — Dealers like to pack contracts with extras, such as service contracts, warranties and options that you did not request.
• Financing fraud — Dishonest dealers may lie about your credit store to convince you that you have bad credit and are not eligible for a low interest rate.
• Trade-in lies — Dealers may also lowball the value of your trade in to get you to spend more out of pocket.
• Yo-yo sale — With a smile, you drive your new car home, but you soon receive a call from the dealer that your financing failed to qualify and that you have to redo the deal at a higher interest rate.
• Cosigner scam — Dealers tell a cosigner that he or she is signing as a reference, whereas in truth he or she turns out to be fully liable for the amount of the loan.
• Buy-lease switch — Customers are frequently tricked into thinking that they are purchasing their car when, in truth, they are simply leasing the automobile.

Pursuing legal actions against car dealers may be quite a challenge. Before initiating a suit against a dishonest dealer, schedule a free consultation with our San Diego auto fraud attorney.