Auto fraud cases in New Jersey encompass a range of deceptive practices by dealerships and individuals, often leading to significant legal consequences. Here are some notable examples:
1. Fraudulent Loan Applications and Identity Theft
In 2014, the owner of several Bergen County used car dealerships, along with four accomplices, was accused of orchestrating a $1.4 million auto loan scam. The defendants allegedly fabricated employment records, inflated incomes, and provided false pay stubs to secure loans for unqualified buyers. In some instances, loans were taken out in the names of individuals who had never purchased vehicles from the dealerships, leading to charges of conspiracy and theft by deception.
2. Deceptive “Buy Here-Pay Here” Practices
In 2019, the New Jersey Division of Consumer Affairs filed a lawsuit against two South Jersey “Buy Here-Pay Here” auto dealerships. These businesses targeted consumers with poor credit, selling high-mileage used cars at inflated prices and offering in-house financing with high interest rates and stringent terms. The dealerships allegedly engaged in a practice known as “churning,” where they repossessed vehicles after buyers defaulted and resold them multiple times, exploiting financially vulnerable consumers.
3. Fraudulent Repair Practices
Auto repair fraud is another prevalent issue. Examples include mechanics failing to provide written estimates, performing unauthorized repairs, overcharging customers, and making deceptive statements about the necessity of certain services. Such practices violate the New Jersey Consumer Fraud Act and have led to legal actions against offending repair shops.
4. Legal Precedents in Auto Fraud
In the case of Huffmaster v. Robinson (1986), the plaintiff sued an auto repair shop under the Consumer Fraud Act. The court awarded damages to the plaintiff despite the defendant’s claim of good faith, emphasizing that violations of the Act can result in liability regardless of intent.
These cases highlight the importance of consumer vigilance and the legal avenues available for addressing auto fraud in New Jersey. The state’s Consumer Fraud Act provides robust protections, allowing consumers to seek remedies such as treble damages and attorney’s fees when they fall victim to deceptive practices.
Notable Cases:
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Lynnes Automotive Group (Bloomfield, NJ):
- Allegations: Between 2016 and 2020, Lynnes Nissan, Hyundai, and Subaru dealerships were accused of double-charging fees, failing to honor vehicle warranties, and not disclosing prior accident histories.
- Settlement: The dealerships agreed to a $46,381 settlement and committed to refraining from signing documents on behalf of customers or engaging in bait-and-switch tactics.
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Glen Motors (Fair Lawn, NJ):
- Allegations: The dealership was accused of charging customers for aftermarket parts not listed in contracts and adding services without customer consent.
- Settlement: Glen Motors agreed to a $90,000 settlement and implemented measures to ensure transparency in their sales processes.
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Open Road Auto Group:
- Allegations: Operating 15 locations across central and northern New Jersey, Open Road Auto Group faced accusations of deceptive practices, including failing to disclose prior damage and charging for unauthorized add-ons.
- Settlement: The group reached a $300,000 settlement with the state and agreed to enter binding arbitration for consumer complaints over the next three years.
Overview of the Auto Fraud Case
The New Jersey Attorney General’s Office announced nearly $400,000 in settlements against three dealership groups accused of deceptive practices. These settlements involve:
- Lynnes Auto Group (Nissan, Hyundai, Subaru – Bloomfield, NJ)
- Glen Motors (Fair Lawn, NJ)
- Open Road Auto Group (15 locations across Central & North Jersey)
Allegations Against the Dealerships
According to the Attorney General, these dealerships defrauded customers for years by engaging in deceptive practices such as:
✔ Double-charging fees to customers
✔ Failing to honor vehicle warranties
✔ Hiding prior accident history from buyers
✔ Failing to obtain necessary signatures for legal sales
✔ Charging for aftermarket parts without disclosure
✔ Falsifying or accepting incomplete credit applications
Settlement Terms & Penalties
Each dealership reached a binding agreement with the state to compensate victims and change business practices to comply with consumer protection laws.
| Dealership | Settlement Amount | Key Violations |
|---|---|---|
| Lynnes Auto Group (Bloomfield, NJ) | $46,381 | Signed documents on behalf of customers, engaged in bait-and-switch tactics, failed to honor advertised pricing |
| Glen Motors (Fair Lawn, NJ) | $90,000 | Charged for aftermarket parts without listing them in the contract, falsely claimed certain add-ons were mandatory |
| Open Road Auto Group (15 NJ Locations) | $300,000 | Failed to disclose accident history, charged for unauthorized parts, misrepresented financing details |
Additionally, for the next three years, these dealerships must resolve customer complaints through binding arbitration overseen by the state.
Legal Takeaways: Why This Matters for NJ Consumers
1️⃣ The NJ Consumer Fraud Act (CFA) Protects Car Buyers
- Under the CFA, fraudulent dealerships can be held liable for treble (triple) damages and attorney’s fees if found guilty of deceptive practices.
2️⃣ Auto Fraud is Common – Even at Major Franchise Dealerships
- Many consumers assume big-name dealerships follow the law, but cases like this prove that even well-known brands engage in fraud.
3️⃣ Consumers Must Stay Vigilant
- Always review contracts thoroughly, ask for a written vehicle history report, and verify all fees before signing a deal.