Can I Sue a Car Dealership For Lying?

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Lying to customers might not make a car dealer's nose grow long, but it can cause his reputation to go south. And it could also get him into court. Both state and federal laws contain auto dealer fraud provisions intended to punish dealerships that lie to their customers. These laws make deception and unfair practices by dealers illegal.

Dealers and Unfair Sales Practices

Auto dealer fraud laws penalize unfair sales practices and dealer deception. The common law tort of fraud covers this type of deception, but so do various federal and state consumer protection laws.

Dealers are much more sophisticated than their customers when it comes to vehicle purchases. Over their working lives, dealers sell many cars while most customers purchase only a few. Dealers often work on commissions, so stand to gain from every sale, and they can also make profit from getting a customer to finance the vehicle. That can cause their standards of conduct to descend into the unacceptable.

Fraud is deliberate and intended to deceive. This must be distinguished from negligence, which is accidental.

What Does Car Dealership Lying Look Like?

Dealers can behave fraudulently by either lying directly or declining to disclose parts of the deal you may not like, termed non-disclosure. Non-disclosures happen when a dealer fails to provide information affecting the value of the car or the salesperson withholds information affecting the desirability or value of a vehicle. For example, a dealer may not mention that the car was involved in a collision or that it used to be a rental car.

A dealer's direct lies, called affirmative misrepresentations in the laws, also are intended to mislead customers into buying vehicles for more money than they are worth. Anything that is blatant deception can fall into this category, like changing the odometer or false advertising, such as claiming a car has features it actually lacks. Or, a dealer may sell a car as new when it is used. It's not unheard of for customers' down payments to be misappropriated by the dealership.

Financing schemes can also be considered unfair practices. “Yo-yo financing” is one example. It starts when a dealer sells the customer a vehicle under a specified payment plan. But down the road, the dealer reports that the financing company has rejected the credit application and offers a much more expensive financing plan. At this point, the customer doesn't have much choice.

Taking Torts to Court

To take an auto dealer fraud to court, a common law tort action can be an easy and effective way to get a substantial award. First, talk with an attorney about your case, however. To prove a common law fraud case, you'll need to show that the dealer omitted or misrepresented material facts, causing you to lose money. As a remedy, you can ask for the right to surrender an unwanted vehicle, plus get a refund of all payments. Or you can ask to cancel outstanding loan balances. You may even be able to collect court costs and attorney fees and, in the right case, punitive damages to punish the dealer for shameful conduct.

To sue for negligence, you must show that the dealer failed to act with due care, and that this failure injured you. For example, if a dealer sells you a car without inspecting the brakes, you might sue for negligence when you get into an accident.


  • Both state and federal law authorizes a private suit against a car dealership for lying and committing unfair trade practices.

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