Paying inflated prices for simple auto repair jobs. Using cheap parts for repairs. Selling useless extended warranties. Charging higher-than-necessary interest rates for loans.
These are a few of the ways auto-related scams are victimizing consumers, according to a new report by Tampa-based insurance price comparison website Clearsurance.
The report, based on an analysis of complaints to the Federal Trade Commission in 2020, found that Nevada was the worst state for auto-related fraud in 2020, with 346 complaints per 1 million residents, followed by Delaware (338) and Floridaq (337).
Massachusetts reported the lowest number of complaints — 15 per 1 million residents, followed by Kansas (73) and Rhode Island (76).
The two most likely ways consumers get scammed are at repair shops and dealerships, the report found. While a majority of these types of businesses are honest, services provided by them tend to involve complexities that provide plenty of opportunities to entrap consumers who might be confused or uninformed.
“Unless you are a savvy mechanic or lease expert, it is easy for scammers to slip in confusing technology to add on fraudulent charges,” the report says.
Complaints that Clearsurance used for its analysis include what it calls “soft fraud” cases, including deliberate scams and deceptive business practices.
The FTC defined auto-related cases as: “Misleading or deceptive claims regarding auto prices, financing, leasing or warranties; repair/maintenance issues with newly purchased used or new cars, including dissatisfaction with service provided by auto mechanics; price fixing and price gouging concerns against gas stations and oil companies; etc.”
Common ways that auto repair shops scam their customers include making unnecessary repairs, inflating prices for simple repair jobs, using cheaper counterfeit parts, charging for unused repair parts and faking malfunctions, such as “finding” oil leaks.
Dishonest dealerships, the report found, will hide unnecessary products or services in their leases, lie about a customer’s credit score to justify charging more, charge extremely high interest on loans, sell useless extended warranties, and charge for vehicle prep work that the manufacturer already did, such as vacuuming and washing the car and removing protective plastic.