Auto Dealer Payment Packing

When you see a new car ad or a sticker price on a car at the dealership, you expect that’s the price. However, the dealership may try to add fees, costs, and packages. Some additional fees are required, but others are optional. Unfortunately, some dealers include add-ons to the financing agreement without the buyer’s knowledge.

Lying about mandatory fees or adding costs without the buyer’s consent is payment packing fraud. If a dealership misrepresents the sale price with undisclosed add-ons, contact a vehicle fraud attorney.

What Is Payment Packing?

Payment packing involves a car dealer including add-ons or extra features without the buyer’s knowledge or consent. Payment packing is a common type of auto dealer fraud. It increases the dealership’s profit at the car buyer’s expense. Payment packing can violate the Federal Trade Commission (FTC) Act. Discriminatory payment packing can also violate the Equal Credit Opportunity Act.

Payment packing increases the car’s price by several different methods. Here is an example of how payment packing works. The salesperson says that you qualify for a $500 monthly payment, but the lender really approves a $450 monthly payment. The dealer then includes add-ons to make up the difference without telling you. They may claim these extras are free or discounted when they aren’t.

Sometimes, the car dealership won’t show you the full contract—only where you need to sign. Only later will you find out the finance manager added packages or add-ins that increased the sales price by thousands of dollars. Deceptive sales teams may also tell you that optional packages are mandatory.

Is Payment Packing Illegal for Vehicle Purchases?

The Federal Trade Commission enforces consumer protection laws involving the automotive industry. This restricts deceptive business practices by car dealers. FTC protections prohibit material misrepresentations in vehicle sales.

The FTC Act specifically prohibits “unfair or deceptive acts or practices in or affecting commerce.” Payment packing involves misrepresentations or deceptive omissions of material facts.

Many state consumer laws and lemon laws also prohibit deceptive practices in car buying. Charges that appear in the contract later without your authorization are fraud. Misrepresenting optional fees as required is also auto fraud. You can report illegal payment packing to the FTC or your state attorney general.

What Fees and Add-Ons Are Included in a Car Sale?

Any required fees and add-ons should be included in the car advertisements. Read the fine print. It should include what fees are and aren’t included. Some states require other taxes and fees, including:

• Vehicle registration fees
• Title documentation fees
• Sales tax

You can negotiate other fees and costs with the dealership. They may require certain packages to get the advertised sales price, but they should include them in the ads and purchase contract. Watch out for the following fees in a purchase agreement before signing:

• Service contracts or extended warranties
• Advertising fees
• Destination fees
• Dealership fees
• Gap insurance
• Maintenance plans
• Chemical protection
• Windshield protection
• Key replacement service
• Roadside assistance

Can You Sue a Dealership for Payment Packing?

You can file a fraud lawsuit against the dealership for payment packing scams. Adding fees to a car purchase without your consent is a type of auto fraud. An auto fraud lawsuit can allow you to recover financial damages, including:

• Refunding any down payment
• Returning your trade-in
• Canceling the sales contract
• Getting punitive damages
• Paying attorneys’ fees

The FTC or state attorney general can also file a lawsuit against the deceptive dealership. Regulator penalties can include statutory penalties, injunctions, and dealer’s license restrictions.

How Can I Protect Against Illegal Payment Packing?

The sales manager can make it difficult to realize you are getting ripped off with undisclosed add-ons. You can take steps to protect your car purchase from scams like payment packing. If you’re financing a new or used car purchase, you can get pre-approval from your bank or credit union. If you do, the dealership won’t be able to trick you with different finance terms.

Get everything in writing before signing the sales contract. Carefully review the terms and fees. Make sure you know the out-the-door price. If the salesperson pressures you to sign before you understand all the terms and conditions, you can walk away from the sale. If the dealership includes add-ons without your consent, report it to your state attorney general or the FTC. You can also contact a lawyer to file a fraud claim against the dealership. Contact a dealership fraud lawyer for legal advice.