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Overview

California car dealer fraud occurs when a dealer makes false representations, omits material facts, or engages in deceptive practices during a vehicle sale. California law provides strong consumer protections, including the right to rescind the transaction and recover substantial damages.

Key Protection: Under California Vehicle Code Section 11713, dealers are prohibited from making false or misleading statements about vehicles. The Consumer Legal Remedies Act (Civil Code 1750) provides for treble damages and attorney's fees for dealer fraud.

Common types of dealer fraud in California:

  • Odometer fraud: Rolling back or disconnecting the odometer
  • Salvage title concealment: Hiding prior salvage, rebuilt, or flood title
  • Accident damage concealment: Failing to disclose prior collisions
  • Frame/structural damage: Hiding significant damage history
  • Payment packing: Adding undisclosed products to financing
  • Yo-yo financing: Demanding vehicle return after sale for new terms
  • Bait and switch: Advertising one price but charging another
  • Lemon laundering: Selling buyback vehicles without disclosure
Important: Before filing a lawsuit under the CLRA, you must send the dealer a written demand letter at least 30 days before filing. This is a legal requirement under Civil Code Section 1782.
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Evidence Checklist

Gather this evidence to support your dealer fraud claim:

Purchase Documents

Sales contract, buyer's order, financing documents, and all signed paperwork

Vehicle History Report

Carfax, AutoCheck, or NMVTIS report showing actual history

Pre-Purchase Communications

Emails, texts, and written statements from salesperson about the vehicle

Advertising Materials

Screenshots of online listing, window sticker, and promotional materials

Independent Inspection Report

Mechanic's inspection revealing undisclosed damage or issues

Title and Registration

Vehicle title showing any brands (salvage, rebuilt, flood, lemon law buyback)

Witness Information

Names and contact info for anyone who heard dealer's statements

Repair Estimates

Estimates or invoices for repairs needed due to undisclosed conditions

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Calculate Damages

Calculate your potential recovery from dealer fraud:

Purchase Price $25,000
Less: Actual Value (with issues) -$12,000
Overpayment (Actual Damages) $13,000
CLRA Treble Damages (3x) $39,000
Repair Costs $3,500
Total Potential Recovery $42,500+
Rescission (Return the Vehicle)

You can demand to rescind (cancel) the transaction:

  • Return the vehicle to the dealer
  • Get back full purchase price
  • Loan should be cancelled
  • Recover sales tax, registration, and other fees
  • Recover incidental costs (insurance, repairs, etc.)
Benefit of the Bargain Damages

If you keep the vehicle, you can recover:

  • Difference between price paid and actual value
  • Cost of undisclosed repairs needed
  • Diminished value due to damage history
  • Additional interest paid on inflated loan amount
Treble (Triple) Damages Under CLRA

If the dealer's conduct was willful:

  • Court can award up to 3x actual damages
  • "Willful" means intentional deception, not mere negligence
  • Pattern of similar conduct helps prove willfulness
  • Dealer's knowledge of defect is key evidence
Odometer Fraud Damages

Under federal and state odometer laws:

  • 3x actual damages OR $10,000, whichever is greater
  • Attorney's fees and costs
  • Punitive damages possible in California
  • Can pursue both dealer and prior rollback source
Attorney's Fees: Under the CLRA and Odometer Act, prevailing consumers recover their attorney's fees. This makes it economical to hire an attorney even for moderate claims, as the dealer pays the legal costs.
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Sample Language

Use this template language for your dealer fraud demand letter:

CLRA Demand Letter (Required Before Lawsuit)
[Your Name] [Your Address] [City, State ZIP] [Phone Number] [Email] [Date] VIA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [Dealer Name] [Dealer Address] [City, State ZIP] Re: Demand for Rescission/Damages - Vehicle Fraud Vehicle: [Year Make Model] VIN: [VIN Number] Purchase Date: [Date] Stock No.: [If known] Dear [Dealer Name]: NOTICE UNDER CALIFORNIA CIVIL CODE SECTION 1782 This letter constitutes the notice required by Civil Code Section 1782(a) prior to filing suit under the Consumer Legal Remedies Act (Civil Code Sections 1750 et seq.). This letter is also demand for relief under California Vehicle Code Section 11713 and the Federal Odometer Act (49 U.S.C. 32701 et seq.). FACTS On [Purchase Date], I purchased the above-referenced vehicle from your dealership for a total price of $[Amount]. Your salesperson, [Name], represented that: [List all representations made - e.g.:] 1. The vehicle had never been in an accident 2. The odometer reading of [XXX,XXX] miles was accurate 3. The vehicle had a clean title with no salvage or other brands 4. The vehicle was in excellent mechanical condition 5. [Other representations] FRAUD DISCOVERED On or about [Discovery Date], I discovered these representations were false: [Detail the fraud - e.g.:] 1. A Carfax report reveals the vehicle was in a major collision on [Date] with $[Amount] in damage 2. Service records show the vehicle had [higher mileage] on [earlier date] 3. The vehicle has a branded title due to [salvage/flood/lemon law buyback] 4. A mechanic inspection revealed [undisclosed damage or defects] VIOLATIONS OF LAW Your conduct violates: 1. Vehicle Code Section 11713 (false statements by dealer) 2. Civil Code Section 1770(a)(5) (misrepresenting vehicle characteristics) 3. Civil Code Section 1770(a)(7) (representing goods are of a particular quality when they are not) 4. Civil Code Section 1770(a)(9) (advertising goods with intent not to sell as advertised) 5. 49 U.S.C. 32703 (odometer tampering) [if applicable] 6. Business & Professions Code Section 17200 (unfair business practices) DAMAGES As a result of your fraud, I have suffered the following damages: - Overpayment for vehicle: $[Amount] - Cost of repairs for undisclosed damage: $[Amount] - Diminished value: $[Amount] - Incidental expenses: $[Amount] - TOTAL ACTUAL DAMAGES: $[Amount] DEMAND Pursuant to Civil Code Section 1782, I demand that within thirty (30) days you: OPTION 1 - RESCISSION: 1. Accept return of the vehicle 2. Refund the full purchase price of $[Amount] 3. Pay off or cancel the financing with [Lender Name] 4. Refund sales tax, registration, and document fees of $[Amount] 5. Reimburse my incidental costs of $[Amount] OR OPTION 2 - DAMAGES: 1. Pay actual damages of $[Amount] 2. Pay additional damages as appropriate under applicable law CONSEQUENCES OF FAILURE TO CURE If you fail to remedy this situation within 30 days, I will file suit seeking: - Rescission or actual damages - Treble damages under the CLRA for willful violation - Punitive damages - Attorney's fees and costs - Any other relief the court deems appropriate I am also prepared to file complaints with: - California Department of Motor Vehicles - California Attorney General Consumer Protection Division - Federal Trade Commission Please respond in writing within 30 days. Sincerely, [Your Signature] [Your Printed Name] Enclosures: - Vehicle History Report - [List other evidence] cc: [Attorney, if retained]
Odometer Fraud Demand Letter
[Your Name] [Your Address] [Date] VIA CERTIFIED MAIL [Dealer Name] [Address] Re: Federal Odometer Act Violation Vehicle: [Year Make Model], VIN: [VIN] Dear [Dealer]: DEMAND UNDER FEDERAL ODOMETER ACT (49 U.S.C. 32701-32711) On [Date], I purchased the above vehicle from your dealership. At the time of sale, the odometer read [XXX,XXX] miles, and you provided an Odometer Disclosure Statement certifying this mileage. ODOMETER FRAUD DISCOVERED I have discovered that this odometer reading was false: [Provide evidence - e.g.:] 1. Service records from [Source] dated [Date] show mileage of [Higher Amount] 2. Carfax/AutoCheck reports show mileage inconsistency on [Date] 3. Mechanical inspection reveals wear inconsistent with stated mileage This constitutes a violation of 49 U.S.C. 32703, which prohibits odometer tampering and false disclosure. DAMAGES Under 49 U.S.C. 32710, I am entitled to recover: - THREE TIMES actual damages, OR $10,000, whichever is greater - Reasonable attorney's fees and costs Actual damages for odometer fraud = (Represented mileage value) - (Actual mileage value) Using standard per-mile depreciation: $[Amount] actual damages Treble damages (minimum $10,000): $[Amount] DEMAND I demand payment of $[Amount] within 30 days to resolve this matter without litigation. If payment is not received, I will file suit in [court], seeking treble damages, attorney's fees, costs, and any other available relief. Sincerely, [Your Name]
Yo-Yo Financing Response
[Your Name] [Your Address] [Date] [Dealer Name] [Address] Re: Rejection of Demand for Vehicle Return Vehicle: [Year Make Model], VIN: [VIN] Contract Date: [Date] Dear [Dealer]: I am in receipt of your letter dated [Date] demanding that I either return the vehicle or sign a new contract with different financing terms. I reject this demand. BINDING CONTRACT EXISTS On [Date], I purchased the above vehicle and signed a Retail Installment Sales Contract. I provided a down payment of $[Amount], took possession of the vehicle, and have been making payments. This contract is binding. YOUR OPTIONS WERE CLEAR The contract states that financing is "subject to approval." However: 1. You allowed me to take delivery of the vehicle 2. You accepted my trade-in and down payment 3. You registered the vehicle in my name 4. [Number] days have passed since the sale Under California Civil Code Section 2983.35 and established case law, you cannot unilaterally cancel a completed sale merely because you were unable to assign the contract to a third party. ILLEGAL CONDUCT Your demand constitutes: 1. Violation of Vehicle Code 11713.1(e) - making buyer responsible for dealer's financing failure 2. Violation of CLRA - unfair and deceptive business practice 3. Potential theft/conversion if you repossess DEMAND I demand that you: 1. Cease all demands for the vehicle's return 2. Cease all threats of repossession 3. Honor the original contract terms 4. Confirm in writing that the sale is final If you attempt to repossess this vehicle, I will immediately contact law enforcement and file suit for: - Conversion/theft - CLRA violations - Intentional infliction of emotional distress - Punitive damages The vehicle will not be returned. Honor your contract. Sincerely, [Your Name] cc: California Department of Motor Vehicles [Attorney]

Next Steps

After discovering dealer fraud, take these steps:

1. Gather and Preserve Evidence

Document everything immediately:

  • Order Carfax, AutoCheck, and NMVTIS reports
  • Get an independent mechanic inspection
  • Preserve all paperwork, texts, and emails
  • Screenshot all online listings
  • Take photos/video of vehicle condition
2. Send CLRA Demand Letter

This is a required step before filing a CLRA lawsuit:

  • Send via certified mail with return receipt
  • Keep a copy for your records
  • Wait at least 30 days for response
  • If dealer offers to cure, evaluate carefully before accepting
3. File Complaints

Report the dealer to regulatory agencies:

  • DMV: File complaint online at dmv.ca.gov against dealer license
  • Attorney General: File complaint with Consumer Protection Division
  • FTC: Report at reportfraud.ftc.gov
  • BBB: File complaint (less effective but public)
4. Consult an Attorney

Consider hiring a consumer protection attorney:

  • Many work on contingency (no upfront cost)
  • Attorney's fees recoverable under CLRA if you win
  • Experienced attorneys know dealer tactics
  • Most offer free consultations
5. File Lawsuit if Necessary

If the dealer doesn't resolve the matter:

  • Small Claims: Up to $10,000 (no attorneys allowed)
  • Limited Civil: $10,001-$25,000
  • Unlimited Civil: Over $25,000
  • File in county where you bought the vehicle or where dealer is located
Don't Delay: The statute of limitations is strict. CLRA claims must be filed within 3 years. Odometer claims within 2 years (or 1 year from discovery). Act promptly to protect your rights.

Been Defrauded by a Car Dealer?

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