You finally did it—you bought the car you’ve been eyeing for months. The purchase went smoothly enough, and you feel good about your decision.
But a few weeks later, your new car starts having problems.
You take it back to the dealer, expecting a simple fix, only to be met with excuses, delays, and, eventually, outright denial. That’s when you realize you might be dealing with more than just a bad car — you’re facing dealership fraud.
Lemon laws exist to protect buyers from defective vehicles, but when a dealer knowingly misrepresents a car’s condition, the legal issues go beyond a simple warranty dispute.
In this post, we’ll break down how lemon laws work, how dishonest dealerships exploit loopholes, and what steps you can take if you find yourself stuck with a lemon.
What Are Lemon Laws?
Lemon laws exist to protect consumers who unintentionally buy defective vehicles. Each state has its version, but the core idea is the same: if you purchase a new (or sometimes used) vehicle that has substantial defects the dealer or manufacturer can’t fix after a reasonable number of attempts, you may be entitled to a refund, replacement, or compensation.
For instance, California’s lemon law (the Song-Beverly Consumer Warranty Act) is one of the most consumer-friendly in the country. Under CA lemon law, consumers who purchase or lease a new vehicle that turns out to be defective are protected if certain conditions are met.
- The car must have one or more substantial defects that affect its use, value, or safety.
- The defect must have been identified and officially reported while the vehicle was still under the manufacturer’s or dealer’s warranty.
- The defect was not caused by driver abuse, error, or neglect.
- The manufacturer’s certified repair facility had a reasonable number of repair attempts (two or more).
- The vehicle has been in the repair shop for 30 or more cumulative days due to warranty-covered defects.
If you believe you’ve been sold a defective car, contact a California lemon law lawyer immediately. The problem is, lemon laws rely on honesty and transparency from both buyers and dealers. And unfortunately, not all dealers play by the rules.
Where Consumer Fraud Comes into Play
Consumer fraud occurs when a seller intentionally deceives a buyer for financial gain. In the auto industry, this type of fraud involves dealers misrepresenting or hiding critical information about a vehicle to close a sale.
Common examples of dealership fraud in car sales include:
Concealing Past Accidents or Flood Damage
One of the most frequent scams is failing to disclose a vehicle’s accident history or flood damage. A car that’s been involved in a major collision or submerged in water can have hidden structural issues, electrical malfunctions, or mold growth, all of which compromise its safety and longevity.
Unscrupulous dealers might avoid documenting this damage or manipulate vehicle history reports.
Odometer Rollbacks
Lower mileage translates to higher resale value. Some dishonest dealers roll back odometers to make a vehicle seem less used than it is. Not only does this inflate the car’s value, but it also misleads buyers about its wear and tear.
Selling Cars with Known Mechanical Problems
In some cases, dealers knowingly sell vehicles with serious mechanical issues, such as faulty transmissions or engine defects, without disclosing them. They might perform temporary fixes to mask the issues long enough for the buyer to drive off the lot.
Misrepresenting “Certified Pre-Owned” Status
Certified Pre-Owned (CPO) vehicles are supposed to undergo rigorous inspections and meet specific quality standards. However, some dealers falsely advertise used cars as CPOs without actually performing these checks. As a result, buyers end up paying premium prices for vehicles that haven’t been properly vetted.
When dealers hide known defects, they cross the line from simple business into fraud. Even if they later try to fix the issue under warranty, the initial deception can still land them in legal hot water.
When Lemon Law and Consumer Fraud Collide
In some cases, lemon law and consumer fraud laws work together, but they focus on different issues.
Lemon law addresses the product itself. It makes sure you get a car free from significant defects that impact safety, usability, or value. If your car has persistent, irreparable defects, you can seek a settlement under lemon law.
Consumer fraud laws, on the other hand, focus on the dealer’s behavior. They go after businesses that intentionally mislead or deceive buyers.
When these two legal areas overlap, you can pursue both types of claims. For example, if a dealer knowingly sells you a defective car and hides that fact, you can file a lemon law claim for the bad car and a consumer fraud claim for the deception.
Consumer fraud claims can also include punitive damages – extra money meant to punish the dealer for extreme negligence. This can significantly increase the compensation you receive and hold dishonest dealers accountable.
What to Do If You’ve Bought a Lemon or Been Defrauded
If you suspect your car was sold under false pretenses, take action quickly. The longer you wait, the harder it can be to build a strong case. Many states also have statutes of limitations that restrict how long you have to file a claim under lemon law or consumer fraud mandates.
Document Everything
Start by keeping detailed records, including:
- Receipts for all purchases and repairs
- Repair orders and service reports from the dealership or authorized repair shops
- Emails, texts, and letters exchanged with the dealer or manufacturer
- Photos or videos of recurring defects or damage
- Mileage logs and dates of all service appointments
For consumer fraud, it’s important to gather evidence that shows the dealer knowingly misrepresented or hid information about the vehicle, such as falsified odometer readings or concealed accident history.
Contact the Dealer
Before taking legal action, allow the dealer to fix the problem. Sometimes, dealerships will offer a settlement or fix the problem to avoid legal disputes.
If you’re dealing with a lemon law issue, request that the dealer complete the necessary repairs and make sure they properly document each attempt. In cases of dealership fraud, ask for explanations regarding discrepancies like odometer rollbacks or hidden damage.
Consult a Lemon Law Attorney
While you can pursue a lemon law claim on your own, it’s in your best interest to consult a lemon law attorney. Auto manufacturers and dealerships typically have experienced legal teams whose primary goal is to minimize payouts and protect the company’s bottom line. Without an equally formidable lemon law attorney, you risk being outmatched.
A competent attorney brings legal knowledge, strategic negotiation skills, and a deep understanding of state-specific lemon laws. They can help you navigate the legal process, gather necessary evidence, and build a solid case that increases your chances of a successful outcome.
Also, a lawyer can help determine if you have grounds for a lemon law claim, a fraud claim, or both.
Many lemon law attorneys work on a contingency basis, meaning they only get paid if they win your case. Additionally, some states require the manufacturer or dealer to cover your legal fees if you prevail.
File a Complaint
If the dealer refuses to cooperate, file a complaint with your state’s consumer protection agency, such as the Attorney General’s office, or organizations like the Better Business Bureau (BBB). Regulatory agencies can investigate claims of fraud or deceptive business practices and sometimes pressure dealers into settling disputes.
Consider Small Claims Court
For cases involving lower-dollar amounts, consider small claims court. It allows you to seek compensation without needing a lawyer, though you’ll need solid documentation to make your case.
Each state has limits on how much you can claim. In California, for instance, natural persons (individuals) can file claims for amounts up to $10,000.
How to Spot Fraud Before It’s Too Late
Buying a car is a significant investment, and shady dealers typically bank on buyers skipping over important steps in the excitement of the purchase. Here’s how to spot red flags and avoid buying a defective or misrepresented vehicle.
Get an Independent Inspection
Never rely solely on the dealer’s word about a vehicle’s condition – especially when it’s a used vehicle. Always take the car to a trusted, independent mechanic for a comprehensive inspection. A qualified mechanic can spot hidden issues like frame damage, engine problems, or flood damage—issues that may not be visible during a quick test drive.
Check the Vehicle History Report
Use services like Carfax or AutoCheck to review the car’s history. These reports can reveal critical information, including past accidents, title issues, and previous usage.
If the dealer refuses to provide a history report or the information seems incomplete, take your business elsewhere.
Watch for “As-Is” Sales Warnings
Many used cars are sold “as-is,” meaning you assume full responsibility for any repairs post-purchase. With “as-is” sales, the dealer has no obligation to fix future issues. While not all “as-is” cars are lemons, the risk is higher. Always have an “as-is” car thoroughly inspected and be wary of deals that seem too good to be true.
Ask Direct, Specific Questions
Dealers are required by law to disclose known defects, but it’s up to you to ask the right questions. Be direct with queries like:
- Has the car been in any accidents?
- Has it ever been flooded or salvaged?
- Are there any current mechanical issues or recurring problems?
- Can I see the service and repair records?
Request written confirmation of any claims the dealer makes — verbal assurances won’t hold up if you discover issues later.
The Bottom Line
Car dealerships have a responsibility to be honest about the vehicles they sell. If they hide defects or lie to make a sale, they’re breaking the law. Whether your case falls under lemon law or dealership fraud, you don’t have to accept a raw deal.
Know your rights, take action, and don’t let a dishonest dealer get away with scamming you. The more consumers fight back, the harder it becomes for shady dealerships to keep ripping people off.
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