Watching out for Fraud

tidester · July 2009

Have you or anyone you know been the victim of fraud in relation to buying, leasing or maintaining a vehicle? Let's discuss it here.

tidester, host
SUVs and Smart Shopper

Karen_S · July 2009

Watching Out for Fraud

howardp2 · July 2009

Cash for Clunkers (CFC) failed me yesterday.

Last week I got email quotes for a Honda CR-V from 3 dealers. All about 21,300 out the door (Base model LX, automatic). Didn't mention CFC. Last Friday went to a different dealer in person and agreed on a final OTD cost of 21,600 (had added options). I even told them about the $4,500 I'd need for CFC. They said they had to finalize the program over the weekend.

But, they agreed to sell the car for a final price of $17,188. Before going to pick it up yesterday, they called and the owner wants another $1,100 if I want to use CFC. Otherwise, they'll do the same price without CFC. Owner says they don't want to "loan" the Gov/t the $4,500 for an unknown number of days till they get the money back.

Okay, I can see that. I offered to pay them 6% of the $4,500 for 90 days ($68) plus an extra $100 just so I wouldn't have to start over. They still want $1,100 more. I told them no.

Funny, another dealer told me last week they would only sell a car at MSRP if someone wanted to use CFC. Same thing about floating a free loan to the Gov't. So, I gotta start all over.

jeffyscott · July 2009

25% interest for what is supposed to be a 10 day delay in getting the money from the government seems just a bit ridiculous.

This sort of thing and the post about the person waiting to get their $4500 check from the dealer (which is not the way this is supposed to be done, according to the rules) are some examples of how this deal might not turn out to be what it appears to be for some. For the person waiting for a check, I wonder what happens if the dealer does not get the $4500 and has already destroyed the clunker (which I think they may need to do before they can get the money)?

I was figuring there would be a mad rush of people doing deals with absolute junk vehicles so they'd not care if the new car was $500 or $1000 higher than it otherwise would be. With the rush of buyers, the dealers may not need to offer as big of discounts as otherwise to sell cars.

So in my case, with a $2000-2500 vehicle and only $3500 in C4C money available on the only cars my kid might want to use it for currently, we decided not to worry about jumping in to this.

kdhspyder · July 2009

Those dealers have the option of doing that if they so choose. My guess is that they will lose sales by taking this position but they might come out ahead profit-wise / cost-wise in the short term. But it's their business to run.

Sylvia · July 2009

Payments to dealers are ALREADY being made through the system so in my personal opinion the dealers are really being dorks on this.

elmerfudd1 · July 2009

I did my deal over the weekend, no issues. But have a question to pose to the world. The law states that the dealer is to estimate the scrap value of the trade in and pass it along to the purchaser less $50. In my case, the estimated scrap value of my trade (1998 Ford Ranger, 233K miles) was listed at $50. What experience has everyone else had with this? Is this typical?

elmerfudd1 · July 2009

Are they? I keep looking for evidence that things are moving ahead, haven't seen anything much in the news. On my deal, we did it Saturday, on Monday it took the dealership five hours for one submission, and they lost the system in the afternoon. Finally got my stuff submitted yesterday afternoon.

No real surprise (I think it's pretty impressive the gov't put the whole system in place in basically 30 days), but I haven't seen anything when the payments will process once submitted, assuming clean paperwork.

oldfarmer50 · July 2009

"...by Sylvia STAFF..."

I've never seen that title before. Is that the Edmunds equivalent of "Boss" as in "Boss of the Hosts"? If I get mad at a Host can I get them in trouble if I complain to you?

Please let me know, some of them have been mean to me and I'd like to tattle. :P

nortsr1 · July 2009

What dealers. Please name some????

Sylvia · July 2009

You can always complain but I may be like Lucy on the Peanuts cartoon :P

volvomax · July 2009

Considering that the most valuable part of the car(the driveline) can't be re-used the scrap value probably isn't more than $100 or so. Could very well be $50. Esp if there is an influx of metal. Remember, anything that floods the market lowers the price.

fezo · August 2009

Payments to dealers are ALREADY being made through the system so in my personal opinion the dealers are really being dorks on this.

I love it when you talk technical.... :P Dorks. I've used that term a lot when dealing with car dealers...

tidester · August 2009

the most valuable part of the car(the driveline) can't be re-used

I'm not sure I understand your point. The driveline is precisely the scrap that CARS is intended to create - i.e. it IS the bulk of the scrap value defined in the law. That would ordinarily work out to $300 to $400 for typical sized car even with modestly depressed scrap values. What's leftover can be sold as parts and the dealer stands to profit from that.

tidester, host
SUVs and Smart Shopper

jwilliams2 · August 2009

Tidester, I don't understand your point. The dealer only gets what the salvage yard pays him for the disabled car. Most dealers want no part of dismantling junkers and selling used parts. They just want it off their lot as soon as possible. The salvage yard will certainly profit, but I'm not sure how the dealer stands to profit.

tidester · August 2009

The law specifically states that the dealer must inform the customer of the scrap value of the clunker and it specifically states that the dealer may retain $50 for administrative costs. Naturally, that leads to the question of who gets the proceeds from the scrap. I am not lawyer but that wording suggest to me that the scrap funds should go to the customer.

If the (all) money was intended to be retained by the dealer then why specifically require the dealer to inform the customer? Perhaps someone can enlighten me.

tidester, host
SUVs and Smart Shopper

jwilliams2 · August 2009

Again, scrap value to the dealer is the amount the salvage yard is willing to pay him and haul it off. If it is $100, he should pass on the extra $50 to the customer. If it is only $50, then the customer gets nothing. If the salvage yard wants to charge the dealer $50 to come get it, then I guess the dealer has to eat that amount. I think that is the extent of the dealers responsibility.

I can't imagine the government wants the customer auditing the salvage yards to find out what parts they salvaged and how much they sold them for a year down the road.

volvomax · August 2009

The most VALUABLE part of any scrap car is the engine/transmission. In most cases these are still in working condition if the car is scrapped. Most common reason for scrapping is an accident. The rest of the car has very little value. Most interior trim pieces cannot be removed safely and the exterior panels are usually too beat up to be of any real value. Aftermarket parts are quite cheap for most cars as well as being brand new or remanufactured. So, you are down to recycling the metal. Given the influx of metal, prices will go down, A scrap yard just MIGHT make a couple or three hundred on such a car, but it isn't a great profit margin.

nortsr1 · August 2009

A lot of them take off the wheels, pop the windshields. possibly fenders, hoods. I know this is stretching the point, but most of the scrap yards I went to worked this way!!
When I was younger, many a day I spent at the junk yard looking for a certain whatever. A lot of the bigger scrap yards now, actually have a computer based inventory.

ramiel · September 2010

On August 2010 we purchased a 2007 Mercedes GL450 from Ibrahim Galabi and Bill Renau at Springfield Acura, in Springfield NJ. We were told that the vehicle had a navigation system, and we needed to wait for the DVD, which they had ordered, for the system to work. We were also informed that the vehicle had satellite radio and we would need to subscribe in order to activate it and was Bluetooth capable, and we needed to pair our phone with the vehicle in order to set it up. Upon returning home we attempted to activate our satellite radio, only to be informed by the provider that the car was satellite ready but did not have a receiver and that would cost $200 plus installation. We also tried to pair our phone with the vehicle, when we were unable, we called Mercedes and were informed that this vehicle did not have Bluetooth capabilities. When we went to the dealership on August 2010 to have the navigation set up in the vehicle, we were informed that it did not in fact have a navigation system. We researched getting one installed through Mercedes Benz and the cost would be $6000. Bill Renau, the general manager, informed us that he would correct this matter immediately, and for the time being we should use the vehicle that we had purchased until he could find a suitable replacement meeting the specifications of the vehicle we believed we had purchased. On Septmeber 1, 2010 we spoke to Ibrahim Galabi, our sales representative who sold us the vehicle, and he informed us that he was not able to get a comparable vehicle but was able to secure a 2008 but it would be an additional $5000 out of pocket for us. They also offered us $600-700 if we would be willing to keep the original vehicle. This setup was a scam, a play off of the traditional bait and switch. We were sold a vehicle which we believed met all of our required specifications, only to be informed after we had paid for it, that it did not have the amenities we were looking for and that in order to get those we needed to pay an extra $5000.

jipster · September 2010

The General Manager didn't keep his word. I'd call corporate Mercedes and complain. You should either get the items that were promised, or the money that they cost, If corporate doesn't put some pressure on Mercedes to accomodate you, you can always take the dealership to small claims court. Or, you can counter offer. Tell them you want $2,500... or whatever you think reasonable.

jwilliams2 · September 2010

Well, if the car was purchased at an Acura dealer, I'm not sure what Mercedes-Benz corporate can do. You might be better off insisting that they take the car back and return your money so you can buy a correct vehicle.

isellhondas · September 2010

Mercedes won't do anyting. Why should they?

He bought it from an Acura dealer as a USED car.

You have to be very careful selling those cars! They "appear" to have a NAVI screen but it's not! Some even have a NAVI button that may cause someone to assume the car has NAVI when it doesn't!

This means the car is "prepped" to have NAVI installed. I didn't think it was anywhere near that much money though.

My guess is that the inexperienced dealer saw the NAVI button and assumed it had it. Making a dumb assumption will bite you every time. I doubt that fraud was involved just ignorance.

I would ask them to unwind the deal or refund whatever you think is fair.

BTW, the Mercedes NAVI systems weren't that great. For under 300.00 you can buy a nice Garmin or other system and getting a Bluetooth adapter is no big deal either.

cadillacmike · October 2011

Yes its over a year old, but this is just plain wrong.

Sure the most valuable thing in an scrapped car is the engine / transmission, and yes most cars are scrapped because of an accident, but your logic on everything else is non-existent. I don't know what you are seeing , but what I've seen is a lot different. The seats and interior panels can all be removed very easily as can the dashboard and all interior electronics. I've pretty much taken my convertibles apart more than once to clean / repair / replace. Exterior parts - except for the accident area are usually all usable as well. Sure some cars are trashed - usually the 12-25 year old ones. Newer ones have a lot of usable items in them. If the wheels weren't trashed, some of these factory chrome wheels are worth $500 EACH. I know my ElDorado's wheels were worth that much, when it got hit.

But car dealers don't want to have any part of this - it's the salvage / recycle (aka junkyards) that are doing this and they are making money - and not soley off engines & transmissions!

So yes scrap value to the dealer is usually less than $500.

kiaram · November 2011

nice!

Now I remember, when I was just a kid and my father use to spend time working on his new car, I would stayed by his side all day long starring at him, from then on I develop my interest in cars.

rjdjd · September 2012

Background: purchased a "new" 2005 RX-8 in 2006. Ran into engine problems (car was stalling on me while driving on several occasions) and after paying for several fixes that didn't work (throttle body cleans, spark plugs, etc.) Mazda finally replaced the engine in 2008 at around 35,000 miles. This past week, several years later after moving to another part of the country, my new local Mazda service tech advises me that my engine has been replaced twice, to which I am surprised and tell him that it was only replaced once. The service tech further advises me that the original Mazda dealer that had the car for sale replaced the engine at the dealership with 11 miles on the odometer. It was then sold/traded to another Mazda dealer from whom it was sold to me as "new."

After having to pay for several fixes that fixed nothing and breaking down in traffic several times, I requested that they purchase my car back. Both Mazda North America and the dealer from whom I purchases the car advised me that the '04 & '05 RX-8s with the engine problems were not having any further problems on their 2nd engines, gave me a new engine (after trying to make me accept a "new" remanufactured engine), and gave me an extended warranty after catching Mazda North America lying about no "new" non-reman engines existing or otherwise being available.

I do not do my own auto work, but I always took the advice of the manual and service techs with regards to warming up and not shutting down the rotary engine cold, revving it, and keeping the oil at a good level. Still, I was afraid to drive my car a lot after the engine problems, am only at 62,000 miles now, as I predominantly drove my wife's car after getting married. I am now in need of a family car due to the arrival of our first child, and I took my car into the Mazda service dept to have them fix anything that might be wrong to maximize my resale or trade-in value (one dealership, when offering me a lower-than-expected trade-in value, said my car had a history of engine problems and this prompted me to go to the Mazda service dept).

My question then is what would you do if you were me? I have a pretty short window to find a more family friendly car and will be trading it in. But I want to know whether Mazda North America and either of the two Mazda dealerships (both of which are no longer operating, but both auto groups still own other brand dealerships) were in the wrong in: (1) selling me a car as "new" that already had major value repairs done and without that disclosure, and (2) persuading me that a 2nd engine would be placed in my car and that 2nd engines weren't having problems (when my car unbeknownst to me already had 2 engines that failed)? My nose is bent out of shape at this point, and part of me wants remedy for what in my mind is fraud, and if nothing else would like to get the story out.

fushigi · September 2012

It isn't uncommon for cars to be damaged while in transit from the factory to the dealer. Generally such body damage is fixed/replaced by the dealer (probably with an insurance reimbursement by the transport company) before the car goes on sale. The car's warranty and ability to be sold as "new" are not impacted since the car was never titled.

While it is hard to imagine the engine being damaged while in transit, if Mazda determined there was a problem and proactively replaced the engine before it went on sale or if the dealer found the engine to be DOA then it would have been replaced before being made available for sale. Again, warranty and status as new aren't impacted.

Consider the relatively recent recall where, IIRC, Nissan had to stop selling some cars so they could be repaired due to a safety defect that was uncovered. Is it really a different scenario? Cars had parts replaced by the dealer before being put on the lot.

Your repair was perhaps greater in scope but I don't see that it matters. And since the car is coming with a full warranty there's not much for Mazda or the dealer to disclose. I'm sure if you had come in and mentioned you were aware of a problem they'd immediately state it's already been taken care of, but no salesman for any brand is going to proactively admit the car has already needed some service department TLC.

BTW I had a '93 MX-3. The AT went at 38K miles and again at 76K. The first was replaced under warranty; the second under extended warranty. I got rid of it before the next multiple of 38K rolled around.

Others can tell you if the engine work impacts resale or not; I'm just saying that having work done pre-sale is par for the course.

Congrats on getting married and on your child.

rjdjd · September 2012

Thanks for the thoughtful reply. I forgot to mention that the '04 & '05 RX-8s were acknowledged by Mazda as having engine defects for those model years. And I probably didn't word it the best, but I made a written request to Mazda corporate to buy back my vehicle after several failed engine repairs, leading up to their proposed "new" reman engine. When they told me that they would give me an actual new engine when I objected to the reman, they advised me that 2nd engines were not failing. Two problems here: it was actually a 3rd engine they were proposing to provide and not a 2nd (they lied about the amount of engines replaced in my car), and, 2nd, 3rd, etc. engines have been failing in these cars. Had I both known that it would have been the 3rd new engine, and that subsequent engines had been failing, I could have sought a better remedy at the time, i.e. seeking a buy back of my car. But for the fraudulent statements from Mazda I relied upon, I would not have agreed to a 3rd engine as the repair. And I sure as heck would not have paid the price I paid for my "new" car had I known it already had a failed engine on the dealer lot.

On a quick caselaw search, I found some cases supporting the notion that not disclosing this amount of repair work on a "new" car as being fraud. In one case in which BMW got hammered for a more inexpensive repaint, the dicta in the case stated: "BMW acknowledged that it followed a nationwide policy of not advising its dealers, and hence their customers, of predelivery damage to new cars when the cost of repair did not exceed 3 percent of the car's suggested retail price." And the trial court in that case held that it was still fraud not to reveal work done when it was below that 3% benchmark. My situation is more egregious in several ways: scope of the work was more than 3% of the car's price, engine failure is a lot more serious than paint damage, and the work was done after delivery of the vehicle (so both the dealer and Mazda corporate knew about it as Mazda reimbursed the dealer for making the repairs).

robr2 · September 2012

IMHO, you are going to spend too much energy and get nothing back.

It sounds like the car is running fine now. Go buy a new car, trade this one in and move on.

thename1000 · September 2012

If this is the wrong place for this question, please direct me to the right place

I'm looking for a used car and saw this one:
http://greensboro.craigslist.org/cto/3251784131.html

Its actually a small dealer:
https://plus.google.com/109635785125972420420/about?hl=en

I've found 2-3 bad reviews (including 2 on BBB website which gave it an F rating). That sample size is small, however.

So I'm not sure if its dangerous to try to buy a car from here? I'm worried I'll have a mechanic check it out, they won't find much, but later on I'll find out the engine will be just be 'bad' or similar? Should I move on?

Thanks!

Kirstie_H · September 2012

All used cars are kind of a crapshoot. If you really like the car - and it doesn't appear that it's a common vehicle - I'd definitely take it to a mechanic. It's a $3,000 car, so it won't be perfect in all likelihood, but at that point, you're talking about relying on the mechanic rather than the dealership. It's not likely that the dealership knows a lot about the car's mechanical condition, regardless of what they say.

kapitansparrow · February 2013

Hello,

I have a friend who got duped into buying a used car that is worth around 13K with a financing plan that will add up to 30K. Considering how ridiculous the loan is, what are her options? Is this a matter for the small claim court? Should she be contacting a lawyer right away? Should she tell the dealer to renegotiate the contract? I don't know how much money she already put into it, but assuming it's not a lot, should she just stop paying and have them take the car back? Any advice would be much appreciated! Thank you.

Kirstie_H · February 2013

Well, we would really need more details about the transaction to give you advice - specifically, how was she duped? I mean, if, in ignorance, she just overpaid for the car and signed a really bad finance contract, there's not a lot she can do, and no attorney will take the case as there's nothing to recover. Bad judgment does not have any legal recourse available. However, if there's more to the story, people here may be able to offer feedback.

isellhondas · February 2013

Yep. not enough info for any of us to venture a guess.

She is probably out of luck since the deal has been done.

There may be more to this story. She could have horrible credit and/or she may have traded in a car she was badly upside down in.

Who knows?

Watching out for Fraud

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