📋 Overview: Used Car Fraud in California

Used car fraud is one of the most common consumer scams in California. Whether you purchased from a licensed dealer or a private seller, if the seller concealed material information about the vehicle's history, condition, or mileage, you have legal remedies.

Common Types of Used Car Fraud

Odometer Rollback/Tampering

Reducing the displayed mileage to make the vehicle appear less worn and more valuable

Salvage Title Concealment

Hiding that the vehicle was declared a total loss by an insurance company

Flood/Fire Damage

Failing to disclose water damage from floods, hurricanes, or fire damage

Prior Accident Concealment

Hiding significant collision history, frame damage, or airbag deployment

Lemon Laundering

Reselling vehicles that were bought back as lemons without disclosure

Title Washing

Registering vehicle in another state to "wash" branded titles (salvage, rebuilt, flood)

Dealer vs. Private Seller Fraud

Aspect Licensed Dealer Private Seller
Regulatory Oversight DMV, Dept. of Motor Vehicles, extensive regulations under Vehicle Code General fraud and contract laws apply; less regulation
Disclosure Requirements Must disclose prior rental, salvage, lemon buyback, frame damage (VC 11713) Must not make affirmative misrepresentations; duty to disclose varies
Available Claims VC 11713 violations, UCL, CLRA, fraud, contract breach Common law fraud, contract breach, UCL (limited)
Penalties DMV license suspension, civil penalties, criminal prosecution Civil damages, potential criminal fraud charges

Curbstoners Are Illegal

"Curbstoners" are unlicensed dealers who pose as private sellers to avoid dealer regulations and disclosure requirements. They often buy damaged vehicles at auction, make cosmetic repairs, and flip them without disclosing problems. Buying from a curbstoner is especially dangerous - if you suspect your "private seller" is actually a dealer, report them to the DMV.

Free Vehicle History Reports

Before buying any used car, get a NMVTIS report (National Motor Vehicle Title Information System) - it's the official federal database for title brands, salvage records, and odometer readings. Also check Carfax or AutoCheck for accident and service history. These reports often reveal fraud after purchase.

✅ Elements to Prove

The specific elements depend on which legal theory you pursue. Here are the key elements for the most common claims:

Fraud/Intentional Misrepresentation

1. False Representation

Seller made a false statement of material fact (e.g., "clean title," "never in accident," stated mileage)

2. Knowledge of Falsity

Seller knew the statement was false, or made it recklessly without knowing if true

3. Intent to Induce

Seller made the statement to induce you to buy the vehicle

4. Justifiable Reliance

You reasonably relied on the seller's statement in deciding to purchase

5. Resulting Damages

You suffered harm as a result (paid too much, vehicle worth less, repair costs)

Concealment/Nondisclosure

Even without an affirmative lie, a seller commits fraud by concealment if:

  • Seller had a duty to disclose (dealers always do; private sellers in some circumstances)
  • Seller knew of the material fact (e.g., prior accident, salvage title)
  • Seller intentionally concealed or failed to disclose the fact
  • Buyer was unaware of the fact and could not have discovered it with reasonable diligence
  • Buyer would not have purchased or would have paid less if the fact were known

Federal Odometer Act

For odometer fraud under federal law, you must prove:

  1. The defendant was a transferor of the motor vehicle
  2. The defendant violated the Odometer Act (tampering, disconnecting, resetting, or altering the odometer; failing to provide accurate disclosure)
  3. The defendant acted with intent to defraud

Proving "Intent to Defraud"

Intent can be proven through circumstantial evidence. Courts have found intent where: the seller was in the business of selling cars, the odometer discrepancy was significant, the seller obtained the vehicle from a source known for rolled-back odometers (e.g., auction), or the seller made other misrepresentations.

💰 Damages & Penalties

Used car fraud claims can result in significant recoveries, especially when multiple statutes are violated.

Damage Type Description
Out-of-Pocket Losses Difference between price paid and actual value of vehicle as received
Benefit of the Bargain Difference between price paid and value if vehicle were as represented
Repair Costs Cost to repair undisclosed defects or damage
Treble Damages (Odometer) 3x actual damages or $10,000 minimum under Federal Odometer Act
Punitive Damages Additional damages to punish fraud and deter future misconduct
Attorney Fees Mandatory under CLRA and Federal Odometer Act if you prevail
Civil Penalties Up to $2,500 per CLRA violation; up to $50,000 for dealer VC violations

Sample Damages Calculation

Example: Odometer Fraud + Salvage Title Concealment

Consumer paid $18,000 for a vehicle advertised with 45,000 miles and clean title. Investigation revealed actual mileage was 145,000 and vehicle had salvage title from prior total loss.

Price paid $18,000
Actual value (145K miles, salvage title) -$4,500
Actual damages $13,500
Federal Odometer Act treble damages (3x) $40,500
Estimated attorney fees $15,000
Potential punitive damages (fraud) $25,000+
POTENTIAL TOTAL RECOVERY $80,500+

Rescission Option

In cases of fraud, you may be entitled to rescind (undo) the entire transaction - return the vehicle and get your full purchase price back. This is often the best remedy when the fraud is severe or the vehicle is unsafe to drive.

📂 Evidence Checklist

Strong documentation is critical for used car fraud claims. Gather these items before sending your demand.

Purchase Documents

Bill of sale, purchase contract, financing documents, odometer disclosure statement

Advertising Materials

Listing printouts, screenshots of online ads, dealer window sticker, any written representations

Vehicle History Reports

Carfax, AutoCheck, NMVTIS report showing actual history vs. what was represented

DMV Records

Title history, registration records, prior owner information

Mechanic Inspection

Post-purchase inspection report documenting undisclosed damage or repairs

Service Records

Prior service records showing true mileage at various dates

Communications

Texts, emails, recorded calls with seller about vehicle history

Expert Appraisal

Professional appraisal showing actual value vs. represented value

How to Get Prior Service Records

Contact the manufacturer's customer service with the VIN to request service history. Many dealerships report services to the manufacturer. Also check with any shops whose stickers are in the window or oil change receipts in the glovebox.

📝 Sample Demand Language

Use these paragraphs as building blocks for your used car fraud demand letter.

Opening - Fraud Claim Notice
I am writing to demand rescission of my purchase of the [YEAR MAKE MODEL], VIN [VIN NUMBER], and full reimbursement of all amounts paid, due to your fraudulent misrepresentation and concealment of material facts regarding this vehicle. This letter also serves as the required 30-day notice under California Civil Code Section 1782 of the Consumers Legal Remedies Act before I initiate legal action.
Odometer Fraud
At the time of purchase on [DATE], the odometer displayed [DISPLAYED MILEAGE] miles. You represented the vehicle had this mileage on the required federal odometer disclosure statement. However, subsequent investigation reveals the vehicle's actual mileage is [ACTUAL MILEAGE] miles based on [service records dated X showing Y miles / Carfax report / DMV records]. This constitutes odometer fraud in violation of the Federal Odometer Act (49 U.S.C. 32703), which entitles me to three times my actual damages or $10,000, whichever is greater, plus attorney fees.
Salvage Title Concealment
You represented this vehicle as having a "clean title" and failed to disclose that the vehicle was previously declared a [salvage/rebuilt/flood/lemon buyback] by [INSURANCE COMPANY/STATE] on [DATE]. Under California Vehicle Code Section 11713.1, dealers are required to disclose prior salvage history. Your failure to disclose this material fact violates VC 11713, the Consumers Legal Remedies Act Section 1770(a)(5) and (a)(7), and constitutes fraud by concealment under Civil Code Sections 1709-1710.
Prior Accident/Frame Damage
When I asked about the vehicle's accident history, you stated [QUOTE WHAT SELLER SAID - e.g., "no accidents," "minor fender bender," "clean Carfax"]. However, the vehicle was involved in a [DESCRIBE - e.g., "major collision on DATE resulting in $X in damage"] that caused [frame damage / airbag deployment / structural repairs]. This prior damage was concealed and significantly affects the vehicle's value and safety. Under Vehicle Code Section 11713.1, you were required to disclose any frame damage. Your misrepresentation induced my purchase and constitutes fraud.
Demand for Rescission and Damages
Based on the foregoing, I demand within 30 days: (1) Rescission of the purchase - you accept return of the vehicle and refund my full purchase price of $[AMOUNT]; (2) Reimbursement of all finance charges and interest paid totaling $[AMOUNT]; (3) Reimbursement of registration fees, taxes, and insurance of $[AMOUNT]; (4) Reimbursement of repair costs incurred of $[AMOUNT]; (5) Payment of treble damages under the Federal Odometer Act if applicable. If you fail to comply, I will file suit seeking the above amounts plus punitive damages, civil penalties, and attorney fees.
Full Sample Demand Letter
[YOUR NAME]
[Your Address]
[City, CA ZIP]
[Your Email]
[Your Phone]

[DATE]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[DEALER/SELLER NAME]
[Address]
[City, State ZIP]

Re: Demand for Rescission - Fraud in Sale of Vehicle
Vehicle: [YEAR MAKE MODEL]
VIN: [VIN NUMBER]
Purchase Date: [DATE]
Purchase Price: $[AMOUNT]

Dear [DEALER/SELLER NAME]:

This letter constitutes formal demand for rescission of my purchase of the above-referenced vehicle and serves as the 30-day notice required under California Civil Code Section 1782 (CLRA).

FACTS

On [DATE], I purchased the above vehicle from you for $[AMOUNT]. At the time of sale, [DESCRIBE REPRESENTATIONS MADE - e.g., "you stated the vehicle had [X] miles and a clean title with no accident history"].

I have since discovered that [DESCRIBE THE FRAUD - e.g., "the vehicle's actual mileage is [X] miles, as evidenced by service records dated [DATE] showing [MILEAGE]. Additionally, the vehicle has a [salvage/rebuilt] title due to [REASON] and was involved in a major accident on [DATE] causing [$X] in damage."]

LEGAL VIOLATIONS

Your conduct violates the following laws:

1. Federal Odometer Act (49 U.S.C. 32703) - Odometer tampering and false disclosure
2. California Vehicle Code Section 11713 - Dealer fraud and misrepresentation
3. California Vehicle Code Section 11713.1 - Failure to make required disclosures
4. Business & Professions Code Section 17200 - Unfair and fraudulent business practices
5. Civil Code Section 1770 (CLRA) - Consumer fraud
6. Civil Code Sections 1709-1710 - Fraud and deceit

DAMAGES

As a result of your fraud, I have suffered the following damages:
- Purchase price overpayment: $[AMOUNT]
- Finance charges: $[AMOUNT]
- Registration/taxes: $[AMOUNT]
- Repair costs: $[AMOUNT]
- Total actual damages: $[AMOUNT]

Under the Federal Odometer Act, I am entitled to three times actual damages or $10,000, whichever is greater, plus attorney fees.

DEMAND

I demand within 30 days:
1. Full refund of purchase price: $[AMOUNT]
2. Reimbursement of all finance charges and costs
3. Payment of all repair costs incurred

Upon receipt of payment, I will return the vehicle to you. If you fail to comply, I will file suit seeking actual damages, treble damages, punitive damages, civil penalties, and attorney fees.

Contact me at [EMAIL/PHONE] to arrange resolution.

Sincerely,

_________________________
[YOUR NAME]

cc: California DMV Investigations
cc: California Attorney General

📥 For Recipients: Responding to a Fraud Claim

If you're a dealer or seller who has received a fraud demand letter, here's what you need to know.

This Is Serious

Used car fraud claims carry significant exposure: treble damages under federal law, punitive damages for intentional fraud, mandatory attorney fee awards, potential DMV license revocation, and even criminal prosecution. Do not ignore this demand.

Immediate Steps

  1. Preserve all records - Purchase documents, disclosures, advertising, communications
  2. Investigate the claims - Verify the vehicle history and what disclosures were made
  3. Review your documentation - Did you have the buyer sign proper disclosure forms?
  4. Assess your exposure - Calculate potential damages including treble damages and attorney fees
  5. Consult an attorney - These claims can escalate quickly and have serious consequences

Response Options

Accept Rescission

If the claim has merit, accepting the vehicle back and refunding the purchase price is often the most cost-effective resolution.

Negotiate Settlement

Offer a partial refund or price reduction to compensate for the undisclosed condition. May avoid litigation costs.

Dispute with Evidence

If you have documentation proving proper disclosures were made (signed forms, initialed statements), respond with that evidence.

Deny and Defend

Only if you have a strong defense. Be aware that losing at trial significantly increases your exposure.

Common Defenses

  • Disclosure was made - Buyer signed forms acknowledging disclosure of the condition
  • No knowledge - You had no knowledge of the undisclosed condition (more effective for private sellers)
  • "As-Is" sale - Vehicle was sold as-is with buyer inspection (limited effectiveness for fraud claims)
  • No reliance - Buyer had independent knowledge or inspection
  • Statute of limitations - Claim filed too late (3 years for fraud in California)

"As-Is" Does Not Protect Against Fraud

An "as-is" disclaimer does not shield you from fraud claims. You cannot disclaim liability for affirmative misrepresentations or intentional concealment of known defects. If you lied about the vehicle or hid known problems, "as-is" won't help you.

🚀 Next Steps

After sending your used car fraud demand, here's what to expect and how to proceed.

Expected Timeline

Days 1-14

Seller receives letter, reviews records, potentially consults attorney

Days 14-30

Response deadline - seller should respond with offer or defense

Days 30-60

Negotiation period if seller makes counter-offer

Day 31+

If no resolution, you can file lawsuit (CLRA notice period expired)

If They Agree to Settlement

  1. Get it in writing - Require a signed settlement agreement
  2. Include all amounts - Purchase price, financing, registration, repairs
  3. Coordinate vehicle return - Don't return vehicle until you have payment
  4. Get lien release - If financed, ensure loan is paid off and title released

If They Refuse or Don't Respond

  1. Consult an attorney - Many take auto fraud cases on contingency due to fee-shifting
  2. File DMV complaint - If a licensed dealer, report to DMV Investigations
  3. File lawsuit - Small Claims (up to $12,500) or Superior Court
  4. Report to AG - File complaint with California Attorney General

Need Legal Assistance?

Auto fraud cases can be complex. Get a 30-minute strategy session to evaluate your claim and discuss your options with an attorney.

Book Consultation - $240/hr

California Resources

  • DMV Investigations: dmv.ca.gov (file dealer complaints)
  • CA Attorney General: oag.ca.gov/consumers
  • Bureau of Automotive Repair: bar.ca.gov
  • NMVTIS (Title Check): vehiclehistory.bja.ojp.gov
  • CA Courts Self-Help: courts.ca.gov/selfhelp

Contact Information

For legal assistance with your California auto fraud claim, contact:
Email: owner@terms.law
Consultation Rate: $240/hour
Flat Fee Demand Letter: $450
Book Online: calendly.com/sergei-tokmakov/30-minute-zoom-meeting