Dealer Fraud in New Jersey: Spot It, Report It, and Recover

© 2024 Ibrahim Ahmed Law Group, P.C. All rights reserved. Original content — unauthorized reproduction prohibited.

Vehicle dealer fraud takes many forms — rolled-back odometers, undisclosed accident history, yo-yo financing, hidden fees, and misrepresentations about a vehicle's condition. New Jersey's Consumer Fraud Act (N.J.S.A. 56:8-1 et seq.) provides powerful remedies for victims of dealer deception, including treble damages and mandatory attorney's fees.

Common Forms of Dealer Fraud

Odometer fraud — Rolling back or tampering with a vehicle's odometer to misrepresent mileage. Federal law (the Motor Vehicle Information and Cost Savings Act) and NJ law both prohibit odometer fraud.

Undisclosed accident history — Selling a vehicle without disclosing prior accidents, flood damage, or salvage title status. Dealers are required to disclose known material defects.

Yo-yo financing — A dealer allows you to take the car home on "approved" financing, then calls you back days later claiming the financing fell through and demanding a higher interest rate or larger down payment. This is a common and illegal bait-and-switch tactic.

Hidden fees and add-ons — Charging for products or services (extended warranties, paint protection, GAP insurance) that were not agreed to, or misrepresenting the cost of these products.

Spot delivery fraud — Representing that a sale is final when the dealer has not yet secured financing, then attempting to change the terms after the buyer has taken possession.

Misrepresentation of vehicle history — Representing a vehicle as a one-owner car, never used as a rental, or never in an accident when the dealer knows otherwise.

The New Jersey Consumer Fraud Act

The NJ Consumer Fraud Act (CFA) is one of the strongest consumer protection statutes in the country. It prohibits:

• Unconscionable commercial practices
• Deception, fraud, false pretense, false promise, or misrepresentation
• Knowing concealment, suppression, or omission of any material fact

Remedies under the CFA:

• Treble damages — Three times your actual damages
• Mandatory attorney's fees — The dealer pays your attorney's fees if you prevail
• Ascertainable loss — You must show an actual, quantifiable loss

The NJ Used Car Lemon Law

New Jersey also has a Used Car Lemon Law (N.J.S.A. 56:8-67 et seq.) that provides protections for buyers of used vehicles from licensed dealers. The protections are more limited than the new car Lemon Law but still provide meaningful remedies for defective used vehicles.

What to Do If You Suspect Dealer Fraud

1. Document everything — Keep all contracts, financing documents, window stickers, and written representations
2. Get a vehicle history report — Carfax or AutoCheck can reveal undisclosed accidents and title issues
3. Have the vehicle independently inspected — A pre-purchase inspection by an independent mechanic can identify undisclosed defects
4. File a complaint — With the NJ Division of Consumer Affairs and the NJ Motor Vehicle Commission
5. Consult an attorney — The CFA's treble damages and attorney's fees provisions make dealer fraud cases economically viable even for relatively small losses

This article is for general informational purposes only and does not constitute legal advice.