Tales From The Cooler: The Land Of The Crooked Car Buyer – Part One

I recently stood on the showroom floor of a Los Angeles-area luxury car dealership as their sales manager pointed out a middle-aged couple browsing the lot. “We will never sell them a car,” he said. “In fact, we are going to politely ask them to leave.” Why? “One of our salespeople recognized them. They are professional Lemon Law scammers. They have hit two other dealers but they are not going to hit us.”

Welcome to Southern California where car buyers are often criminals, ripping off automakers and their captive finance arms to the tune of over $50M a year. These sophisticated white-collar crooks are skilled at using fraudulent means to obtain a vehicle, such as ID theft or sub-leasing cons, or by using fraudulent means to dispose of a vehicle, such as engineering bogus Lemon Law claims or by rolling back a car’s odometer to avoid lease-end excess-mileage charges.

The targeted vehicles are almost exclusively from Audi, BMW, Lexus, Mercedes-Benz and Porsche brands. These automakers and their banks report that around 50% of their fraud cases nationwide occur in Southern California. The Los Angeles melting pot attracts the best and worst class of people, including some clever organized crime groups. Add to this the perception that you are nobody if you are not driving the latest luxomobile in LA and I say you got Trouble in RX City. It is said that all automotive trends start in Southern California and consumers defrauding automakers is one of them.

Some of the outlaws are extremely adept at their chosen crimes and some are hilariously inept. In Part One of Two installments in this exclusive series we will look at the car disposal criminals, starting with a scheme currently sweeping the Southland: The Lemon Law Scam.

In the past, only folks who fell on hard times and were behind on their car’s lease payments would attempt this rip-off; now bandits plan the gambit upfront as a means to drive a new luxury car every year. These unethical individuals also boast high credit scores; in other words they are a bank’s worst nightmare.

The con works like this: go lease a high-end automobile for the longest term, the least miles and lowest down payment you can negotiate. For example, you can lease a 2013 BMW 535i for 39 months at 10,000 miles per year for as little as $585 per month with a few hundred dollars down for title, and license fees. That’s a cut-rate payment for a $55,000 ride and you are now cruising Colorado Boulevard in style.

Enjoy driving your Beemer for a year or so or until you decide you want the latest Lexus. At this point you are buried in your lease deeper than Jimmy Hoffa as it would cost mega-thousands of dollars over the value of the vehicle to pay off the contract.

It is now time for the twist: you or a technician friend tamper with the mechanics of the car to make it eligible to be a Lemon Law buyback for being unrepairable. In California, a defect that cannot be repaired in as little as two visits to the dealer, or if the vehicle is in the shop over 30 days, can be eligible for Lemon Law status. Thus, a stuck dashboard warning light, a balky seat belt buckle or leaking brake fluid can make you the poor victim of the evil carmaker. All it takes is a little tinkering.

Next, hire one of scores of LA lawyers like this one who specialize in Lemon Law cases. Under the threat of a lawsuit, the attorney will negotiate with BMW of North America for them to buy your car back and pay off the lease and will often score a few extra dollars for your “hardship.” Once the case is settled, you head over to your local Lexus store and repeat the process.

One Lemon Law attorney discusses the tampering issue on his website but does not specifically discourage the practice:

…OWNERS BEWARE! What consumer’s don’t know is what the car manufacturer’s DO know about owners tampering with their vehicle’s to “create” a California Lemon Law case…Typical “tampering” of cars include repeated incidents of dash warning lights for various vehicle systems, including, but not limited to: SRS/airbag, “CHECK ENGINE”, traction control, brakes, ABS, and more…Making matters even MORE serious, auto dealers now have special “tamper-seal” for electrical connectors and devices that are invisible to the eye. The newest generation even has a “imprint” film, that takes fingerprints…

The lawyer’s assessment of automakers’ countermeasures is a few years out of date. The latest defense tactics must not be revealed here as the crooks no doubt have Google Alerts set for the words, “tamper” and “Lemon Law.”

Customers caught tampering with their cars find their claims denied and are advised to never set foot in that brand’s dealerships again. Like with most fraud, prosecution by carmakers or their banks is uncommon – accusing a car owner of fraud and losing the case would result in a public relations disaster.

Before we discuss the Angelenos who roll back their odometers to defraud automakers, allow us to make this statement:

America is losing the war on odometer fraud and the situation is growing worse.

The National Highway Traffic Safety Administration has been claiming since 2002 that there are 450,000 cases of odometer tampering annually in the United States, while CarFax reports the number of instances has jumped 57% in the past four years. Contrast this with the fact that less than 20 people per year are actually convicted of the crime and this indicates that the enforcement of odometer laws is not a priority with state and federal agencies.

The vast majority of people apprehended for odometer fraud are either individuals or owners of independent used car lots. Most of the clockers caught are either still plying their trade like this man or receive a slap on the wrist like this dealer. The latter, who also covered some odometers with electrical tape to fool buyers, has been allowed by the court to return to the wholesale car business.

Speaking of dumb criminals, this father and son team from Florida would never make it in California – their placing fliers on vehicles at an auction offering their “odometer services” was incredibly dim-witted and not up to the sophisticated standards of Southland scammers.

The recent explosion in the number of odometer fraud cases can be directly tied to the easy availability of digital odometer rollback devices. For a few hundred dollars, anyone can buy a “mileage correction” contraption from a number of firms on the Internet, even on eBay and amazon.com. The so-called “CAN” device below is offered by a company in China: