Dealer fraud begins at auction houses

When trading in one vehicle to buy a newer one, a California car owner will typically clean it thoroughly, make minor repairs and try to present it to the dealer in the most attractive condition possible. However, after trading in a car, the previous owner will rarely see his or her old vehicle on the same car lot. In fact, the peculiar way in which car dealers obtain their inventory provides a perfect cover for examples of dealer fraud.

Used car dealers frequently buy the cars they sell from wholesale auction houses. Those who have experience in used vehicle transactions keep tabs on where certain makes and models sell best, and they send those vehicles to that location. Pickups, for example, sell better in rural areas, but sports cars are in demand in big cities.

A vehicle traded in at a dealership is sent to auction houses where workers in reconditioning shops prep the cars for auction with new tires, routine repairs on brakes and engines, and cosmetic work, such as detailing, paint touch-ups and filling cracks in windows. The vehicles are then presented to an audience of wholesale buyers who bid on the vehicles as they pass in long rows. Information about the vehicles appears on a screen, and the bidders have about 45 seconds to make a decision. Those hastily purchased cars and trucks are the ones consumers choose from on dealer lots.

Buying a used car is almost always a leap of faith. Lately, vehicles from flood-ravaged parts of the country have made their way through auction houses to California lots. Dealers certainly recognize when a vehicle they win at auction has major, even dangerous defects, and consumers are often the victims of dealer fraud. Obtaining a skilled and experienced attorney at such a time is always a prudent move.