Auto Dealer Fraud: When Is It Worth It to Hire a Lawyer?


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One of the most common types of consumer fraud is auto dealer fraud. A claim of this nature can arise from a number of misrepresentations, deceptive practices or other unethical or immoral behavior. When consumers feel scammed by auto dealers, they may consider hiring a lawyer.

However, when consumers think about hiring a lawyer, there are many considerations that go into making this decision. Often, it comes down to whether it is worth the price of hiring a lawyer. Some considerations include:
Assessment of Damages

For any civil cause of action, there are usually specific damages that the plaintiff may be able to receive. These damages may include:

Actual Damages

A personís actual damages stem from the economic loss that they suffered due to the auto dealerís fraud. In some auto dealer fraud cases, people may lose their down payment. In other cases such as those involving identity theft, the auto dealer may be alleged to have stolen the victimís identity. Damages in these cases can be substantial.

Statutory Damages

Some causes of action may provide statutory damages to the victim, such as claims based on state statutes regarding deceptive trade practices or the violation of consumer protection statutes. Additionally, fraud cases may warrant certain statutory damages. Statutory damages provide a certain amount of damages based on certain offenses and are meant to curtail such abuses in the industry. There may also be statutory damages based on state or federal law if the auto dealer committed certain violations of credit reporting or protection laws. Some statutory damages are limited to a certain amount for each person injured in the claim while others are based on how many times the auto dealer committed a specific violation.

Attorneyís Fees

Some causes of action allow a plaintiff to request reimbursement for attorney fees. If the plaintiff is able to receive these damages, there is little consequence to pursuing the case since attorney fees and costs to bring forth the case may be reimbursed.

Punitive Damages

In some cases, a judge or jury may order punitive damages. This is more likely in cases in which the auto dealerís actions are particularly egregious. Punitive damages are often calculated as a variable multiplied by other damages.

Large Number of Parties Involved

In some instances, an auto dealerís antics are widespread and systematic. There may be hundreds or even thousands of people who have been defrauded in a similar manner. If this is the case, the plaintiffs may join together in a class action. In class actions, the attorney fees are split among the various plaintiffs, making it more affordable for them to pursue the claim.

Types of Auto Dealer Fraud

Another important aspect of deciding whether or not it is worth it to pursue a claim is to determine the nature of the auto dealer case. Different causes of action may have different aspects worth considering, including having a different set of damages or requiring the showing of elements that are harder to prove.

One common source of auto dealer fraud is when the auto dealer fails to disclose the used status of a vehicle. The auto dealer may even misrepresent information about the vehicle, such as the model year, performance abilities or known problems. Deceptive trade practices like bait and switch result in consumers looking for a deal and then being coerced into accepting another product for more money. Other price misrepresentations include misstating facts regarding manufacturer discounts, stating that the purchase price covers more than it really does or stating that an offered price is book level or low when it is not.

Auto dealer fraud can also occur when dealers fail to disclose known defects of the vehicle, misrepresent warranties included with the purchase or charging undisclosed fees. Dealers may also tamper with odometers in order to misrepresent the actual number of miles that a vehicle for sale has or hide the fact that a vehicle had been previously returned due to a state lemon law.

Another common reason for auto dealer fraud claims is due to yo-yo financing. This situation arises when a consumer purchases a vehicle in the belief that the sale is final. However, he or she takes the vehicle home, the dealer contacts the consumer to say that the financing has fallen through and the consumer will need to return the vehicle unless he or she agrees to less favorable refinancing terms.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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