California's strong consumer protection laws provide remedies for dealership fraud, misrepresentation, and deceptive practices—from odometer fraud and salvage title concealment to yo-yo financing scams and forged documents.

Common Dealership Fraud and Misrepresentation Claims

California Vehicle Code §11713 and the Consumers Legal Remedies Act (Civil Code §1750 et seq.) provide strong protections against dealership fraud and deceptive practices. When dealers misrepresent vehicle history, conceal damage, or engage in financing scams, consumers have powerful legal remedies.

Types of Dealership Fraud
📊
Odometer Fraud (Rollback) The dealer turns back or misrepresents the vehicle's mileage to increase its value. Federal and California law impose severe penalties, including treble damages.
🚗
Salvage Title / Undisclosed Damage The dealer sells a vehicle with prior major damage, salvage title, or frame damage without disclosure. California requires dealers to disclose if a vehicle has been "sold for scrap" or damaged beyond certain thresholds.
💼
Bait-and-Switch The dealer advertises a specific vehicle at a specific price to get you in the door, then claims it's sold and tries to sell you a different (usually more expensive) vehicle.
📄
Spot Delivery / Yo-Yo Financing Scam The dealer lets you drive off with the car, then calls days or weeks later claiming "financing fell through" and demanding you return the car or accept worse loan terms.
🏢
Undisclosed Prior Use (Rental, Fleet, Lemon Buyback) The dealer fails to disclose that the vehicle was previously used as a rental, fleet vehicle, police car, or manufacturer lemon law buyback.
✍️
Forged Documents or Altered Contracts The dealer forges your signature, alters the purchase contract after you signed it, or adds products/fees you didn't authorize.
💰
Unauthorized Add-Ons and Dealer Fees The dealer charges for VIN etching, paint protection, fabric coating, or other add-ons without your consent, or adds bogus "dealer fees" beyond allowed amounts.
Odometer Fraud: Federal and State Protections

Odometer fraud is a federal crime under 49 U.S.C. §32703 and also violates California Vehicle Code §28050-28052. Key protections include:

Odometer Act Remedies

Federal damages: The greater of $10,000 or three times your actual damages, plus attorney's fees

California damages: Civil penalties up to $5,000 per violation, plus actual damages and attorney's fees

Proof requirements: You must show the dealer knew or should have known the odometer was false. Evidence includes:

  • Service records showing higher mileage before the sale
  • Carfax or AutoCheck reports revealing mileage discrepancies
  • Title history showing mileage rollback
  • Wear patterns inconsistent with stated mileage (worn pedals, seats, steering wheel on "low mileage" car)
Salvage Title and Undisclosed Damage

California Vehicle Code §11713.18 requires dealers to disclose if a vehicle:

  • Has a salvage title or has been "sold for scrap"
  • Has structural damage affecting safe operation
  • Has flood damage
  • Was a manufacturer lemon law buyback (must be branded on title)
Total Loss / Salvage Branding

California requires salvage branding if a vehicle's damage exceeds a certain percentage of its value (typically if an insurer declared it a total loss). Dealers who "wash" salvage titles by registering vehicles out of state or fail to disclose prior total-loss history face serious penalties under the Consumers Legal Remedies Act and Vehicle Code §11713.

Spot Delivery and Yo-Yo Financing Scams

The "spot delivery" or "yo-yo" scam works like this:

  1. You negotiate a deal and sign paperwork
  2. The dealer lets you drive off with the car (delivery "on the spot")
  3. Days or weeks later, the dealer calls claiming "the financing fell through"
  4. They demand you return the car or sign new paperwork with worse terms (higher interest, larger down payment, expensive add-ons)
Your Rights in Yo-Yo Scams

California law provides protection, but dealers exploit confusion about conditional delivery. Key points:

  • Check for "conditional delivery" language: Review your purchase contract. If it says the sale is "subject to lender approval," the dealer may have the right to unwind the deal if financing truly falls through.
  • Demand proof financing fell through: Make the dealer provide written rejection letters from lenders. Often, the dealer never submitted your credit to the approved lender, or deliberately submitted to lenders likely to reject you.
  • Negotiate from strength: You've been driving the car, it has more miles and wear, and you may have registered it. The dealer must explain why you should accept worse terms.
  • Consider unwinding the deal entirely: Demand a full refund of your down payment and trade-in, return the vehicle, and walk away. Don't let them pressure you into a bad loan.
Document Everything in Spot Delivery Situations

If a dealer lets you drive off without final loan approval:

  • Take photos of the odometer at delivery and when they call you back
  • Keep all paperwork, including any "conditional delivery" agreements
  • Get names of everyone you speak with and take notes
  • Do not sign new paperwork without reviewing carefully or consulting an attorney
  • Report the dealer to the California Department of Motor Vehicles if you believe they engaged in fraud
Undisclosed Prior Use

Dealers must disclose if a vehicle was previously:

🚕
Rental or Fleet Vehicle Prior rental or fleet use must be disclosed, as these vehicles typically have higher wear and multiple drivers. Check Carfax for rental company ownership.
🍋
Lemon Law Buyback California requires "Lemon Law Buyback" branding on the title. If the dealer removed or concealed this branding, you can demand rescission.
🚔
Police or Government Vehicle Prior police use often involves hard driving and must be disclosed. Check VIN history for government fleet ownership.
Rescission vs. Damages

When you discover dealership fraud, you generally have two remedy options:

Rescission (Unwind the Deal)

You return the vehicle and get back everything you paid (down payment, trade-in, monthly payments). The dealer must also pay off your loan. Rescission is available when:

  • The fraud was material (significantly affected your decision to buy)
  • You discovered the fraud within a reasonable time
  • You can return the vehicle in substantially the same condition

Advantages: Clean break, no ongoing loan obligation, you get your money back

Disadvantages: You lose the vehicle, must find replacement transportation, and if you've driven the car extensively, the dealer may claim you can't rescind

Damages (Keep the Car, Get Compensation)

You keep the vehicle and demand monetary compensation for the difference in value between what you thought you were buying and what you actually got. Damages can include:

  • Diminished value: The difference between a clean-title vehicle and one with salvage history, or between actual mileage and represented mileage
  • Repair costs: Cost to fix undisclosed damage or defects
  • Out-of-pocket expenses: Costs incurred due to the fraud (towing, rentals, inspection fees)
  • Statutory damages: CLRA allows up to $5,000 per violation for certain deceptive practices
  • Punitive damages: If the dealer's conduct was willful or fraudulent, courts may award punitive damages to punish the dealer
  • Attorney's fees: CLRA and odometer fraud laws allow recovery of attorney's fees, creating settlement leverage
How Dealers Should Respond to Fraud Allegations

If your dealership receives a demand letter alleging fraud, misrepresentation, or CLRA violations, responding strategically is critical to protecting your license and minimizing damages.

First Steps After Receiving Fraud Allegations
  1. Pull the complete deal jacket: Retrieve all documents—purchase order, credit application, delivery receipts, odometer statement, title documents, vehicle history reports you obtained.
  2. Interview involved personnel: Speak with the salesperson, F&I manager, and any managers involved. Get their version of events in writing.
  3. Verify vehicle history: Pull fresh Carfax and AutoCheck reports, check NMVTIS database, verify title history.
  4. Check insurance and bond: Notify your dealership E&O insurance carrier and review your dealer bond obligations.
  5. Assess customer's claim: Is there merit? Did you make a disclosure error? Can you prove proper disclosure?
Common Defenses for Dealers
✅
Full Disclosure Was Made You have signed buyer's guides, vehicle history reports provided to customer, and clear disclosures of salvage history, prior use, or other material facts.
📋
Reasonable Reliance on Representations You relied on the seller's representations (trade-in, auction vehicle) and had no knowledge of the defect. You can show you obtained normal pre-sale inspections and reports.
🔍
Customer Knew or Should Have Known The defect or issue was obvious from inspection, the customer had independent inspection opportunity, or the vehicle was sold "as-is" with proper disclosures.
⏰
Customer's Delay and Use For rescission claims, if the customer drove the vehicle extensively or delayed reporting the issue, this may bar rescission (though not damage claims).
Settlement Strategies for Dealers
When to Settle Quickly

Consider prompt settlement when:

  • The customer's claim has clear merit (you genuinely failed to disclose salvage history, prior damage, etc.)
  • Your exposure under CLRA or odometer fraud statutes includes attorney's fees and statutory damages
  • The customer has documented evidence (Carfax showing discrepancies you didn't disclose, service records proving odometer fraud)
  • The deal amount is small relative to potential litigation costs and reputational damage
Settlement Options

Unwind the deal entirely: Take the car back, refund all money, pay off the loan. Get a full release. This is cleanest when the customer wants out.

Price reduction / partial refund: Offer a cash payment reflecting the diminished value due to the undisclosed issue. Customer keeps the car.

Repairs or replacement: If the issue is fixable (undisclosed damage can be properly repaired), offer to repair at your expense and provide compensation for diminished value.

Dealer License and DMV Risks

California DMV regulates dealer licenses and can suspend or revoke licenses for fraud, misrepresentation, or CLRA violations. Even if you settle the customer's civil claim, DMV may pursue administrative action. Work with experienced dealer defense counsel to manage both the civil claim and any regulatory exposure.

Evidence Checklist for Dealership Fraud Claims

Strong documentation is essential for proving dealership fraud. Whether you're a consumer pursuing claims or a dealer defending against allegations, gather these key documents.

For Consumers (Claimants)
📄
Purchase Contract and Buyer's Order All documents you signed at the dealership, including purchase agreement, financing documents, odometer disclosure statement, and any buyer's guides or disclosure forms.
📊
Vehicle History Reports Carfax, AutoCheck, and NMVTIS reports showing salvage history, prior accidents, odometer discrepancies, rental use, or lemon law buyback branding.
🔧
Service and Repair Records Records from previous owners or dealers showing higher mileage, major repairs, or accident damage that the dealer didn't disclose.
📋
Title Documents Current title showing salvage or lemon buyback branding, and prior titles if available showing title washing or mileage discrepancies.
📸
Photos and Inspection Reports Independent mechanic inspection documenting undisclosed damage, photos of VIN plate tampering, paint thickness measurements showing bodywork, etc.
💬
Communications and Advertisements Emails, text messages, online ads, and dealer website listings showing misrepresentations about vehicle condition, history, or features.
For Dealers (Respondents)
✅
Disclosure Documentation Signed buyer's guides, vehicle history reports you provided to customer, salvage title disclosures, odometer statements with customer signature.
📋
Pre-Sale Inspection Records Your mechanic's inspection report, any CarFax or AutoCheck reports you pulled before listing the vehicle, auction sale documents if purchased at auction.
📄
Complete Deal Jacket Every document from the transaction: purchase order, credit app, F&I product disclosures, delivery checklist, customer signature pages.
💬
Employee Statements Written statements from sales staff, F&I managers, and any employees involved in the transaction, documenting what disclosures were made.
Settlement Outcomes and Damage Calculations

Dealership fraud cases often settle before trial due to the high stakes: attorney's fees provisions, statutory damages, and dealer license risks create strong settlement pressure.

Typical Settlement Patterns

Clear odometer fraud: Full rescission or 2-3x actual damages (federal treble damages), often 80-100% of purchase price refunded

Undisclosed salvage title: 40-70% of purchase price as diminished value settlement, or full rescission if customer wants out

Spot delivery / yo-yo scam: Unwinding of deal with full refund, or significant interest rate reduction and fee waivers

Forged documents: Immediate rescission, criminal referral, often 100% refund plus consequential damages

CLRA Attorney's Fees Leverage

The Consumers Legal Remedies Act allows prevailing consumers to recover attorney's fees. This creates enormous settlement pressure on dealers—a $10,000 fraud claim can result in $30,000+ in attorney's fees exposure, pushing dealers to settle quickly and generously to avoid litigation.

Dealership Fraud Demand Letter Templates
Demand for Rescission - Undisclosed Salvage Title
[Your Name] [Your Address] [Date] [Dealership Name] [Address] RE: DEMAND FOR RESCISSION - Undisclosed Salvage Title Vehicle: [Year Make Model] VIN: [VIN] Purchase Date: [Date] Purchase Price: $[Amount] Dear [Dealer Principal]: I demand immediate rescission of the vehicle purchase and full refund of all monies paid due to your fraudulent concealment of the vehicle's salvage title history. FRAUDULENT CONCEALMENT: You sold me this vehicle as a clean-title vehicle with no disclosure of prior total-loss or salvage history. I have now discovered through Carfax and NMVTIS that: 1. The vehicle was declared a total loss by [Insurance Company] on [Date] 2. The vehicle received a salvage title in [State] on [Date] 3. The vehicle was rebuilt and the title was "washed" through [out-of-state registration] You had a duty to disclose this material fact under California Vehicle Code §11713.18 and the Consumers Legal Remedies Act (Civil Code §1770(a)(5) and (7)). DEMAND FOR RESCISSION: I demand that you: 1. Accept return of the vehicle 2. Refund my down payment of $[Amount] 3. Refund all monthly payments made ($[Amount]) 4. Pay off the loan balance of $[Amount] with [Lender] 5. Reimburse my registration, taxes, and fees ($[Amount]) 6. Provide written confirmation of rescission and loan payoff ALTERNATIVE: STATUTORY DAMAGES If you refuse rescission, I will pursue litigation seeking: • Actual damages (diminished value) • CLRA statutory damages up to $5,000 • Treble damages if fraud is proven • Attorney's fees and costs • Punitive damages for willful concealment I have filed a complaint with the California DMV and will cooperate fully with any investigation into your license. Respond within 15 business days. Sincerely, [Your Signature] [Your Name]
Demand for Damages - Odometer Fraud
[Your Name] [Your Address] [Date] [Dealership Name] [Address] RE: Federal Odometer Act Violation - Demand for Treble Damages Vehicle: [Year Make Model] VIN: [VIN] Stated Mileage at Sale: [Mileage] Actual Mileage: [Mileage] Dear [Dealer Principal]: You violated federal odometer disclosure laws (49 U.S.C. §32703) by selling me a vehicle with a rolled-back odometer. I demand payment of treble damages as provided by federal law. ODOMETER FRAUD: You represented the vehicle's mileage as [XX,XXX] miles. I have now discovered the actual mileage was [XX,XXX] miles at the time of sale, based on: • Service records from [Source] showing [higher mileage] on [earlier date] • Carfax report documenting mileage progression then sudden decrease • [Other evidence] The odometer was rolled back by approximately [difference] miles, reducing the vehicle's value by $[amount]. FEDERAL DAMAGES: Under 49 U.S.C. §32710, I am entitled to the greater of: • Treble damages (3 × $[actual damages]) = $[amount], OR • $10,000 statutory minimum Plus attorney's fees and costs. DEMAND: Pay $[treble damages or $10,000] within 15 business days or I will file federal court litigation. This violation has been reported to the California DMV and may result in administrative action against your dealer license. Sincerely, [Your Signature] [Your Name]
How I Handle Dealership Fraud Cases

I represent consumers in California dealership fraud and misrepresentation cases. My practice focuses on achieving maximum recovery through rescission, statutory damages, and attorney's fees.

Consumer Representation

I handle odometer fraud, salvage title concealment, yo-yo financing scams, and CLRA violations. Most cases settle within 90-120 days due to dealers' exposure to attorney's fees, statutory damages, and license risk.

Schedule a Dealership Fraud Consultation

If you believe you were defrauded by a car dealer, contact me to evaluate your case and discuss rescission or damage claims.

Schedule Consultation
Frequently Asked Questions

California has a 3-year statute of limitations for fraud claims and 4 years for breach of contract. However, rescission requires acting promptly after discovering the fraud—typically within weeks or a few months. If you've driven the vehicle extensively or waited too long, you may be limited to damages rather than rescission.

"As-is" disclaimers don't protect dealers from fraud or CLRA violations. If the dealer made affirmative misrepresentations about odometer readings, salvage history, or other material facts, you still have remedies even if you signed an "as-is" agreement.

Yes. CLRA claims and federal odometer fraud claims allow prevailing consumers to recover attorney's fees. This means the dealer pays my fees separately from your damages recovery, making attorney representation very affordable for consumers with strong fraud claims.