Consumer fraud is a broad title for deceptive practices against consumers that results in a financial or other loss in the course of what seems like legitimate business purposes. There are far too many examples to list, but some common examples of consumer fraud are false advertising, unfair or fraudulent pricing, safety issues, misrepresentation of a product, and car dealership fraud. As mentioned, this is far from a comprehensive list, but in its simplest terms, it is deception by a manufacturer, dealer, or retailer of goods upon a consumer.
False advertising is a common fraud against consumers. Retailers cannot make outrageous claims about their product if the claims are untrue. In New Mexico, false advertising is defined as:
[A]dvertising, including labeling, which is misleading in any material respect; and in determining whether any advertising is misleading, there shall be taken into account (among other things) not only representations made by statement, word, design, device, sound or any combination thereof, but also the extent to which the advertising fails to reveal facts material in the light of such representations with respect to the commodity to which the advertising relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual.
NMSA § 57-15-2. So it is clear that false advertising is not just what is said, but also, what is omitted and should be said.
There are civil penalties associated with false advertisement. See, NMSA § 57-15-4. And, if you suffered damages due to false advertising, you may be able to recover those damages as well.
Most all activities of unfair and deceptive trade practices are covered under NMSA §§ 57-12-1 – 26. New Mexico has great consumer protection laws. NMSA § 57-12-2(D)(1)-(18) outlines what exactly falls into the category of unfair and deceptive practices.
Car dealership fraud is something that happens way more often than one would think. Unfortunately, this is not limited to small dealerships, as bigger dealerships can be just as guilty of this activity. What is car dealership fraud? In its simplest form, car dealership fraud is any act or omission to induce a consumer to purchase a vehicle that is not exactly how it’s described. A very common example is:
A consumer buys a slightly used vehicle. The dealership states that the car is great and never been in an accident. A couple weeks after the purchase, the buyer notices paint is bubbling in areas. After the consumer brings the car to a body shop to look at the damage, the body shop informs them that the car had been in an accident previously, and the repairs made were substandard.
There are many questions that evolve from a scenario like this, such as:
Why did the Carfax show no accidents? Because body shops that repair vehicles after a car accident are not required to report to Carfax and other reporting companies, and most often, they do not.
If the vehicle reports show no accident, how would the dealership know it had been in a car accident previously? Dealerships are required to inspect vehicles that are put on the lot for sale. Such inspections include looking at the exterior, paint, and body. Often times, there will be a slight color difference in the paint or a panel that is slightly misaligned or maybe even a little rust coming through. These are indicators that a more detailed look is necessary because it is likely that the vehicle has been in a prior accident.
Do dealerships do this intentionally or negligently? That is the million-dollar question. However, a vehicle that has been involved in a previous accident will have a significant decrease in value compared to one that has not. Therefore, it helps the dealership’s bottom-line if they can sell the vehicle for the cost of a non-wrecked vehicle.
The reality of this situation is that some car dealerships do actively attempt to deceive its consumers. Luckily, New Mexico has great laws that will hold the dealerships accountable for these deceptive and fraudulent activities. Besides the New Mexico Unfair Practices Act, there is the New Mexico Motor Dealers Franchising Act (NMMDFA), which is obviously more specific to the conduct of car dealerships. The NMMDFA is in Chapter 57, Article 16 of the New Mexico Statutes Annotated. When the acts are done willfully and maliciously, the damages can be tripled as a punishment to the dealerships for conducting in such activity.