What to Do If a Car Dealership Scammed You: A Complete Legal Guide

The sinking feeling arrives a few days after you drive home. Something about the paperwork doesn’t add up. The monthly payment is higher than you agreed to. There’s a $1,200 “protection package” you never discussed. The financing terms shifted somewhere between the handshake and the signature.

You’re not alone. Auto-related complaints have topped the Consumer Federation of America’s annual survey for nine consecutive years. The Federal Trade Commission received 21,400 auto fraud complaints in just the first quarter of 2025, a 43% increase over the same period in 2024. At that pace, consumers will file nearly 90,000 formal fraud complaints this year, shattering previous records.

The regulatory landscape has shifted against consumers. On January 27, 2025, the Fifth Circuit Court of Appeals vacated the FTC’s Combating Auto Retail Scams (CARS) Rule, which would have banned many deceptive dealer practices and saved buyers an estimated $3.4 billion in junk fees annually. The court ruled on procedural grounds, not merit, but the protection is gone regardless.

If you’ve signed all the documents and taken delivery, your legal options are more extensive than you might think. Multiple federal laws, state consumer protection statutes, and regulatory agencies exist specifically to address dealer misconduct. Here’s what you need to know.

Understanding What Happened: Common Dealer Scams

Before pursuing any resolution, identify exactly what went wrong. Common dealer scams fall into recognizable patterns, and knowing the specific tactic helps you frame your complaint and identify which laws apply.

Contract packing adds products you never requested. Protection packages, fabric treatments, rustproofing, extended warranties, GAP insurance. These appear in the finance office, often presented as mandatory or “already included.” They’re not. Buyers have the right to refuse any add-on product. Under the Truth in Lending Act, dealers must disclose all charges that are part of the finance charge, and adding undisclosed products violates federal law.

Payment manipulation shifts the terms after verbal agreement. You negotiated $450 per month. The contract says $520. The finance manager extended the loan term, added products, or inflated the interest rate. This works because most buyers focus on monthly payment, not total cost. TILA requires clear disclosure of the annual percentage rate, total of payments, and all finance charges before you sign.

Bait and switch pricing advertises impossible prices to get you in the door. Those prices include rebates you don’t qualify for, require financing through the dealer at unfavorable rates, or disappear when you’re ready to sign. This violates both FTC regulations and state UDAP (Unfair and Deceptive Acts and Practices) statutes in every state.

Spot delivery (yo-yo financing) lets you drive home, then calls days later claiming the financing fell through. They demand a larger down payment or higher interest rate. Sometimes this is legitimate. Often it’s manufactured leverage. If the dealer can’t honor the original terms, you can return the vehicle.

Dealer markup on financing occurs when dealers inflate the interest rate above what the lender approved, pocketing the difference. You qualified for 5.9% but the dealer wrote the contract at 8.9%. This practice has been the subject of discrimination enforcement actions under the Equal Credit Opportunity Act.

Odometer fraud involves rolling back or disconnecting odometers to hide true mileage. This is a federal crime under the Motor Vehicle Information and Cost Savings Act, punishable by up to $100,000 in fines and three years in prison. Civil remedies allow recovery of three times actual damages.

Important Limitations to Know

Before pursuing remedies, understand two significant limitations that catch many consumers off guard.

There Is No “Cooling-Off Period” for Car Purchases

Many buyers believe they have three days to cancel a car purchase. They don’t. The FTC’s Cooling-Off Rule specifically excludes vehicle purchases made at dealerships.

The Cooling-Off Rule covers sales made at your home or temporary locations, but cars are exempt because they depreciate immediately and involve complex title and registration processes. Once you sign the contract and take delivery, you own the car. There is no automatic right to return it because you changed your mind.

The only exception: vehicles sold at temporary locations (like auto shows) by sellers with no permanent business location may be covered. This is rare.

Arbitration Clauses May Limit Your Legal Options

Most dealer contracts contain mandatory binding arbitration clauses. By signing, you may have waived your right to sue in court or join a class action lawsuit.

What this means:

• Disputes go to a private arbitrator instead of court
• The dealer often selects the arbitration company
• Discovery (the process of obtaining evidence) is limited
• Decisions generally cannot be appealed
• Statistics show consumers win arbitration less than 5% of the time

Potential workarounds:

• Small claims court may still be available (some arbitration clauses exempt small claims)
• Regulatory complaints are not affected by arbitration clauses
• If the arbitration clause is “unconscionable,” courts may refuse to enforce it
• Fraud in the inducement (being tricked into signing) may invalidate the entire contract

Review your contract to understand what you agreed to. If you haven’t signed yet, ask to have the arbitration clause removed. The dealer may refuse, but it’s worth asking.

Cancelling Add-On Products for Refunds

If you were sold add-on products you didn’t want, you may be able to cancel them and receive a prorated refund. This won’t undo the sale, but it can recover hundreds or thousands of dollars.

GAP Insurance

GAP insurance can be cancelled at any time for a prorated refund of the unused coverage period. Contact the dealership’s finance department or the insurance provider directly. You’ll need your policy number and proof of the cancellation reason (payoff, sale, or simply no longer wanting coverage).

Refund timeline: 30-90 days. Keep all documentation and follow up if the refund doesn’t arrive.

Extended Warranties and Service Contracts

Most extended warranties can be cancelled for a prorated refund. Contact the warranty administrator (listed in your contract) or the dealership’s finance department. Some contracts have cancellation fees, but the refund often still makes cancellation worthwhile.

Full refund window: Many contracts allow a full refund if cancelled within 30-60 days of purchase. After that, refunds are prorated based on time or mileage used.

Other Add-Ons

Products like paint protection, fabric protection, and VIN etching are often non-refundable once applied. However, if they were added without your consent, you may have grounds to demand removal of the charges entirely, not just cancellation.

Important: Cancelling add-on products doesn’t reduce your monthly payment. The refund typically goes to your lender and reduces your loan principal. You’ll pay off the loan faster, but your payment stays the same unless you refinance.

Your Federal Legal Protections

Several federal laws apply to car purchases and provide specific remedies when dealers violate them.

FTC Act Section 5

The Federal Trade Commission Act prohibits “unfair or deceptive acts or practices” in commerce. While the CARS Rule was vacated, the underlying prohibition remains. The FTC can still bring enforcement actions against dealers for deceptive advertising, hidden fees, and fraudulent practices.

The FTC cannot represent individual consumers, but complaints filed at reportfraud.ftc.gov contribute to pattern recognition that triggers enforcement actions.

Motor Vehicle Information and Cost Savings Act (Odometer Law)

The federal odometer law requires accurate odometer disclosure at sale. Tampering with odometers or providing false statements about mileage is both a criminal offense and grounds for civil action. NHTSA estimates that more than 450,000 vehicles are sold each year with false odometer readings, costing consumers over $1 billion annually.

Remedies: Three times actual damages or $10,000, whichever is greater, plus attorney fees and costs. Report suspected odometer fraud to NHTSA’s Vehicle Safety Hotline at 888-327-4236.

Military Protections (SCRA and MLA)

Active-duty service members have additional protections under two federal laws.

The Servicemembers Civil Relief Act (SCRA) provides:

• 6% interest rate cap on loans taken before entering active duty. Creditors must reduce the rate upon proper request.
• Repossession protection: Creditors cannot repossess your vehicle without a court order during military service for loans taken before active duty.
• Lease termination rights: Service members can terminate vehicle leases early without penalty when receiving PCS orders or deployment orders for 180+ days.

The Military Lending Act (MLA) provides:

• 36% MAPR cap on certain consumer credit products for active-duty members
• Ban on mandatory arbitration in covered credit contracts
• No prepayment penalties on covered loans

Note: The MLA does not cover loans used specifically to purchase vehicles. However, it does cover vehicle title loans (using an existing vehicle as collateral) and prohibits arbitration clauses in those contracts.

If you’re a service member experiencing auto loan issues, contact your installation’s legal assistance office or Military OneSource at 800-342-9647.

Your State Legal Protections

Every state has consumer protection laws that apply to car purchases. These often provide stronger remedies than federal law.

State UDAP Statutes

Every state has an Unfair and Deceptive Acts and Practices statute modeled on FTC Act Section 5. These laws prohibit deceptive practices in consumer transactions, and most also prohibit unfair or unconscionable conduct.

UDAP violations in auto cases include:

• Misrepresenting a vehicle’s history, condition, or features
• Failing to disclose material facts (prior accidents, salvage titles, flood damage)
• Adding unauthorized charges to contracts
• Advertising vehicles at prices the dealer won’t honor
• Misrepresenting financing terms or credit requirements

Remedies vary by state but often include actual damages, statutory damages, and in some states, treble (triple) damages for willful violations. Many state UDAP laws allow recovery of attorney fees.

State Lemon Laws

All 50 states and DC have lemon laws, but coverage varies significantly.

New car lemon laws exist in every state. They typically cover vehicles with substantial defects that the manufacturer cannot repair after a reasonable number of attempts (usually 3-4 repair attempts or 30 days out of service) within the warranty period or first 12,000-24,000 miles.

Used car lemon laws exist in only seven states:

State	Coverage
California	Covers new, used, and leased vehicles
Connecticut	Covers used vehicles with specific protections
Massachusetts	Covers used vehicles sold by dealers
Minnesota	Limited used vehicle coverage
New Jersey	Used vehicles up to 7 years old, under 100,000 miles, minimum $3,000 purchase
New Mexico	Used vehicle protections
New York	Requires dealers to provide written warranty on used vehicles

Remedies: Replacement vehicle or full refund minus a reasonable allowance for use. Many states require manufacturers to pay attorney fees for successful claims.

Step 1: Document Everything

Before contacting anyone, organize your evidence. Your case is only as strong as your documentation.

Gather these documents:

• Purchase contract and all financing paperwork
• Window sticker (Monroney label)
• Any advertisements you responded to (screenshot online listings)
• Text messages, emails, and written communications with the dealer
• Notes from your negotiations (write them down now while memory is fresh)
• Buyer’s Guide (required by FTC on all used vehicles)
• Vehicle history reports (Carfax, AutoCheck, or NMVTIS)
• Repair orders and service records
• Photos of the vehicle and any defects

Create a timeline of events: when you visited the dealership, what was said, what you agreed to, what the contract actually says, when you discovered discrepancies.

If your state allows one-party consent recording, consider recording future conversations with the dealership. Check your state’s laws first. Thirty-eight states plus DC allow one-party consent.

Credit Card Chargebacks for Deposits

If you paid a deposit by credit card and the dealer won’t return it, you may be able to dispute the charge with your card issuer. This is one reason to always use a credit card for deposits rather than cash, check, or debit card.

You can dispute charges if:

• The dealer committed fraud or misrepresentation
• The dealer couldn’t deliver what was promised (wrong vehicle, missing features)
• Financing fell through and you’re entitled to your deposit back
• The dealer added unauthorized charges

Time limit: You must dispute within 60 days of the statement date showing the charge. Contact your credit card issuer immediately if you believe you’re entitled to a refund.

Important: Don’t file a chargeback if you simply changed your mind. Chargebacks require a legitimate dispute, and filing without grounds can backfire if the dealer contests it.

Step 2: Approach Dealership Management

Contact the general manager directly. Skip the salesperson. They can’t help, and they have incentive not to.

Present your case calmly with a specific proposed resolution:

“I purchased this vehicle on . When I reviewed the paperwork, I found . I believe this violates . I’d like to resolve this by . I’m prepared to escalate to regulatory agencies and pursue legal remedies if necessary, but I’d prefer to resolve this directly.”

Mentioning specific laws signals that you understand your rights. Dealers handle uninformed complaints differently than informed ones.

Many disputes resolve at this level. Document the conversation: who you spoke with, when, what was said, what they promised.

Expected timeline: 1-7 days for initial response. Give them a reasonable deadline (7-14 days) to resolve before escalating.

Step 3: Escalate to Ownership

If the general manager won’t help, find the dealer principal, managing partner, or owner. Most dealerships list leadership on their website. If not, call the receptionist or check your state’s business registration database.

Send a formal written complaint via certified mail with return receipt. This creates a paper trail and demonstrates seriousness.

Your letter should include:

• A clear statement of what happened
• Specific laws you believe were violated
• What you’ve already tried to resolve the issue
• Your proposed resolution
• A deadline for response (14 days is reasonable)
• A statement that you will pursue regulatory complaints and legal action if not resolved

Executives at this level manage relationships with manufacturers, lenders, and regulators. They don’t want regulatory complaints on the dealership’s record. Most would rather solve the problem.

Expected timeline: 14-21 days. If no response by your deadline, proceed to regulatory complaints.

Step 4: File Regulatory Complaints

When negotiation fails, regulatory complaints create real pressure. File with multiple agencies. They share information, and multiple complaints demonstrate the problem isn’t isolated.

State Attorney General

Your state AG enforces consumer protection laws and can investigate dealerships for fraud, deceptive practices, and UDAP violations. Dealers fear this channel because too many complaints can result in fines, consent orders, or license revocation.

Find your state’s consumer protection office: usa.gov/state-consumer

Be thorough in your complaint. Include the dealership’s full name and address, a clear description of what happened with dates, names of everyone you communicated with, copies of all documentation, and the specific relief you’re seeking.

State DMV or Motor Vehicle Dealer Board

Many states have specific agencies that license and regulate dealers. These agencies can discipline dealers directly, including suspending or revoking dealer licenses.

State	Agency	Contact
Virginia	Motor Vehicle Dealer Board	mvdb.virginia.gov
Texas	Department of Motor Vehicles	txdmv.gov/complaints
Oregon	DMV Business Regulation	(503) 945-5052
Washington	Department of Licensing	(360) 664-6484
Maryland	MVA Office of Investigations	mva.maryland.gov

Search “ motor vehicle dealer complaint” to find your state’s process. Filing is typically free and can be done online.

Federal Trade Commission

File at reportfraud.ftc.gov. The FTC won’t represent you individually, but complaints contribute to enforcement pattern recognition.

Consumer Financial Protection Bureau

If your complaint involves financing, file with the CFPB at consumerfinance.gov/complaint. The CFPB has enforcement authority over auto lenders (though not dealers directly) and forwards complaints to companies for response. Companies generally respond within 15 days. Learn more about how the complaint process works.

Expected timelines:

• State AG: 30-90 days for mediation; investigations can take 6-12+ months
• DMV/Dealer Board: 30-60 days for initial response
• FTC: No individual response; contributes to enforcement patterns
• CFPB: Companies must respond within 15 days (60 days for complex issues)

Step 5: Consider the Better Business Bureau

The BBB is a private organization without enforcement power, but it offers free dispute resolution that sometimes works.

BBB AUTO LINE specifically handles vehicle warranty disputes through mediation and arbitration. If your vehicle’s manufacturer participates (check the participant list), this costs you nothing. Arbitrators issue binding decisions that manufacturers must honor within 30 days.

Use BBB alongside regulatory complaints, not instead of them.

Expected timeline: BBB processes complaints within 30 days. BBB AUTO LINE arbitration decisions typically take 40-60 days.

Step 6: Pursue Legal Action

If regulatory channels don’t produce results, legal options remain accessible.

Small Claims Court

Small claims court is designed for consumers to represent themselves without attorneys. Limits vary by state:

State	Small Claims Limit
California	$10,000
Delaware	$25,000
Georgia	$15,000
Illinois	$10,000
New York	$10,000
Tennessee	$25,000
Texas	$20,000
Most states	$5,000-$10,000

Filing fees typically range from $15 to $75. Hearings occur 30-70 days after filing. Lawyers generally aren’t allowed, keeping costs low.

Before filing: Send a formal demand letter via certified mail. State the facts, what you’re owed, and a deadline (14-30 days). This creates a record and sometimes prompts settlement.

When filing: Sue the correct legal entity. Check your state’s Secretary of State website for the dealership’s registered name and agent for service of process.

Consumer Protection Attorney

For claims exceeding small claims limits or involving complex fraud, consult a consumer protection attorney. Many work on contingency for strong cases.

Federal laws (TILA, Magnuson-Moss, ECOA) and many state UDAP statutes allow recovery of attorney fees when consumers prevail. This fee-shifting makes it economically feasible to bring claims even when individual damages are modest.

Find an attorney: National Association of Consumer Advocates

Step 7: Use Social Media Strategically

Online reviews create lasting pressure. Dealers care about their Google, Yelp, and Facebook ratings because they directly affect sales.

Post only after you’ve exhausted other options, and stick to verifiable facts. “I was charged $1,200 for products I did not authorize and have documentation showing I did not request” is stronger than “These scammers ripped me off.”

Avoid threats, insults, or exaggeration. Factual, measured reviews are more credible and legally protected as opinion based on disclosed facts.

Prevention: Protecting Yourself Before Signing

The best dispute is the one you don’t have.

Get price quotes in writing before visiting the dealership. Screenshot online listings. Save email confirmations. If the price changes when you arrive, you have evidence of bait and switch.

Check your credit score through a trusted source (annualcreditreport.com provides free reports). Dealers can’t misrepresent your creditworthiness if you know your actual score.

Get pre-approved financing from your bank or credit union. This gives you a baseline rate to compare against dealer financing and protects against rate markup.

Research the dealer before visiting. Check BBB ratings, Google reviews, and complaints filed with your state AG. Search “ complaints” to see what others have experienced.

Read every document before signing. The finance office moves fast deliberately. Take your time. If they won’t let you read, leave.

Refuse unwanted add-ons. Paint protection, fabric treatment, nitrogen-filled tires, VIN etching, extended warranties. You can say no to all of them. If they tell you these are mandatory, they’re lying.

Focus on out-the-door price, not monthly payment. Know the vehicle price, interest rate, and loan term. Calculate what your payment should be. If the contract shows something different, find out why before signing.

Get a vehicle history report for used cars. Carfax and AutoCheck reveal prior accidents, title issues, service history, and odometer readings. Free alternatives include NMVTIS (National Motor Vehicle Title Information System) and VINCheck.info.

Have the vehicle inspected by an independent mechanic before buying used. This costs $100-150 and can reveal problems worth thousands.

Check for open recalls before purchasing. Use NHTSA’s free recall lookup by entering the VIN. If there’s an open safety recall, the manufacturer must fix it free of charge. Download the free SaferCar app to receive recall alerts.

Always use a credit card for deposits. If the dealer won’t return your deposit, you can dispute the charge with your card issuer. Cash, checks, and debit cards offer far less protection.

Common Mistakes That Hurt Your Case

Avoid these errors that can weaken or destroy your dispute:

Waiting too long to act. Statutes of limitations run out. Memories fade. Documents get lost. The longer you wait, the harder it becomes to prove what happened and the less sympathetic regulators and courts will be.

Threatening without following through. If you threaten to file complaints or sue, do it. Empty threats teach the dealer you’re not serious. Either escalate or don’t mention it.

Being emotional instead of factual. Yelling, name-calling, and venting feel satisfying but accomplish nothing. Stick to facts, dates, and documentation. Let the evidence speak.

Accepting verbal promises. “We’ll take care of it” means nothing without writing. Get every commitment in writing, including emails. Verbal agreements are nearly impossible to enforce.

Signing documents you don’t understand. The finance office moves fast deliberately. If you don’t understand something, don’t sign until you do. Once you sign, you’re bound by what the document says, not what you thought it said.

Posting defamatory statements online. Factual reviews are protected. Exaggerations, lies, and accusations you can’t prove are defamation. Stick to what you can document.

Ignoring arbitration clauses. If your contract has a mandatory arbitration clause, filing a lawsuit may get dismissed. Check your contract before deciding on legal strategy.

Giving up too easily. Dealers count on consumers losing steam. The first “no” is rarely the final answer. Escalate methodically and persistently.

When to Cut Your Losses

Sometimes the cost of fighting exceeds what you can recover. Consider these factors:

• Dollar amount at stake: Spending 40 hours pursuing a $300 overcharge may not be worth it. Pursuing $3,000 probably is.
• Strength of evidence: If it’s your word against theirs with no documentation, success is unlikely.
• Arbitration clause: If you’re bound by arbitration and can’t use small claims court, legal costs may exceed potential recovery.
• Emotional toll: Disputes are stressful. At some point, moving on may be worth more than the money.

That said, don’t give up just because the dealer says no. Many consumers recover money simply by being persistent and escalating through proper channels. The dealer’s first response is rarely their final offer.

Frequently Asked Questions

What federal laws protect car buyers from dealer fraud?

Several federal laws apply to car purchases. The Truth in Lending Act (TILA) requires disclosure of financing terms and allows recovery of actual and statutory damages plus attorney fees for violations. The Magnuson-Moss Warranty Act governs warranties and serves as a federal lemon law, allowing recovery of damages and attorney fees. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions. The FTC Act prohibits unfair and deceptive practices.

Can I return a car if the dealer added products I didn’t authorize?

Most states don’t have a “cooling off” period for car purchases. However, adding undisclosed products to your financing may violate the Truth in Lending Act, which requires disclosure of all charges. You may be able to get charges removed, receive a refund, or in some cases rescind the contract. Document the unauthorized charges and consult with a consumer protection attorney if the dealership won’t resolve it.

Which states have used car lemon laws?

Only seven states have used car lemon laws: California, Connecticut, Massachusetts, Minnesota, New Jersey, New Mexico, and New York. Coverage varies. New Jersey covers used vehicles up to 7 years old with less than 100,000 miles if you paid at least $3,000. New York requires dealers to provide written warranties on used vehicles. In other states, used car buyers rely on state UDAP statutes and general fraud laws.

How do I file a complaint with the state attorney general?

Visit usa.gov/state-consumer to find your state’s consumer protection office. Most states allow online complaint filing. Include the dealership’s full name and address, a detailed description of what happened with dates, names of people you dealt with, copies of all documentation, and the relief you’re seeking. Be thorough. The more complete your complaint, the more actionable it becomes.

What is a UDAP statute and does my state have one?

UDAP stands for Unfair and Deceptive Acts and Practices. Every state has a UDAP statute prohibiting deceptive practices in consumer transactions. Most also prohibit unfair or unconscionable conduct. These laws apply to car sales and often provide stronger remedies than federal law, including treble damages in some states. Many allow attorney fee recovery.

How long do I have to file a complaint or lawsuit against a car dealership?

Statutes of limitations vary by state and type of claim, typically ranging from two to six years. TILA claims must generally be filed within one year of the violation. Magnuson-Moss claims typically have a four-year limit. State UDAP statutes vary. File complaints and take action as soon as you discover the problem. Delay weakens your case and may bar your claims entirely.

Can I recover attorney fees if I sue a car dealership?

Yes, under several laws. TILA, Magnuson-Moss, ECOA, and many state UDAP statutes allow prevailing consumers to recover attorney fees. This fee-shifting provision makes it economically feasible to bring claims even when individual damages are modest, because the dealer pays your legal costs if you win. Many consumer protection attorneys work on contingency for strong cases.

What is the difference between the state attorney general and the DMV for complaints?

The attorney general enforces broad consumer protection laws (UDAP statutes) and can investigate fraud, deceptive practices, and illegal conduct. The DMV or Motor Vehicle Dealer Board specifically licenses and regulates dealers. Both can discipline dealers, but through different mechanisms. The AG may seek fines and injunctions; the DMV can suspend or revoke dealer licenses. Filing with both is appropriate for serious violations.

What should I do if the dealer says my financing fell through after I took the car home?

This is called “spot delivery” or “yo-yo financing.” Ask for written documentation of why financing failed, including the lender’s name and specific denial reason. Contact that lender directly to verify. If the original deal truly can’t be completed, you can return the vehicle and should receive your trade-in or its value back. Don’t agree to worse terms under pressure. Some states have specific laws regulating spot delivery practices.

Is dealer markup on interest rates legal?

Dealer markup itself isn’t illegal, but discriminatory markup is. If a dealer charges different consumers different markups based on race, ethnicity, or other protected characteristics, that violates the Equal Credit Opportunity Act. The CFPB and DOJ have brought enforcement actions against auto lenders for discriminatory markup practices. If you suspect you were charged a higher rate due to discrimination, file complaints with the CFPB and your state AG.

What evidence do I need to prove dealer fraud?

Gather your purchase contract, financing documents, window sticker, advertisements you responded to, text messages and emails with the dealership, notes from negotiations, vehicle history reports, and any recordings (if legal in your state). Compare what was promised verbally or in advertising to what appears in your signed documents. Discrepancies between advertised prices and contract prices, or between agreed terms and final documents, are key evidence.

How effective is filing a complaint with the Better Business Bureau?

Effectiveness varies. The BBB is a private organization without enforcement power. Dealers who care about their rating may respond to resolve complaints; others ignore them. BBB AUTO LINE offers free arbitration for warranty disputes with participating manufacturers and can be effective. Use BBB complaints as one tool alongside regulatory filings with your state AG and DMV, not as your only option.

Can I cancel GAP insurance or an extended warranty I was pressured into buying?

Yes. Most GAP insurance and extended warranty contracts can be cancelled at any time for a prorated refund of unused coverage. Contact the dealership’s finance department or the warranty administrator directly. If cancelled within 30-60 days of purchase, you may receive a full refund. After that, refunds are prorated. The refund typically goes to your lender to reduce your loan balance, not directly to you. Expect the refund process to take 30-90 days.

Is there a cooling-off period to return a car I just bought?

No. The FTC’s Cooling-Off Rule specifically excludes vehicle purchases made at dealerships. Once you sign the contract and take delivery, you own the car. There is no automatic right to return it because you changed your mind. The only rare exception is vehicles sold at temporary locations by sellers with no permanent business location, such as some auto shows. Don’t believe anyone who tells you that you have three days to return a car.

What is an arbitration clause and how does it affect my ability to sue?

Most dealer contracts contain mandatory binding arbitration clauses. By signing, you may have agreed to resolve disputes through private arbitration instead of court, waived your right to join class action lawsuits, and allowed the dealer to select the arbitration company. Statistics show consumers win arbitration less than 5% of the time. However, small claims court may still be available, and regulatory complaints are unaffected by arbitration clauses. Check your contract before deciding on legal strategy.

Can I dispute a car deposit charge on my credit card?

If you paid a deposit by credit card and the dealer won’t return it, you may be able to file a chargeback with your card issuer. Valid reasons include fraud, misrepresentation, failure to deliver what was promised, or unauthorized charges. You must dispute within 60 days of the statement date showing the charge. Don’t file a chargeback simply because you changed your mind; there must be a legitimate dispute. This is why you should always use a credit card for deposits instead of cash or debit.

What extra protections do military service members have?

Active-duty service members have additional protections under federal law. The Servicemembers Civil Relief Act (SCRA) caps interest rates at 6% on pre-service loans, prohibits repossession without a court order during service for pre-service loans, and allows early lease termination for PCS or deployment orders. The Military Lending Act (MLA) caps rates at 36% on certain credit products and bans mandatory arbitration in those contracts. Contact your installation’s legal assistance office or Military OneSource at 800-342-9647 for help.

How long does the entire dispute resolution process typically take?

Timeline varies by approach. Dealership management may respond in 1-7 days. Escalation to ownership typically takes 14-21 days. State AG complaints can take 30-90 days for mediation, longer for investigations. CFPB complaints get company responses within 15 days. BBB processes complaints within 30 days; BBB AUTO LINE arbitration takes 40-60 days. Small claims court hearings occur 30-70 days after filing. The entire process from first contact to resolution can take anywhere from two weeks to several months depending on complexity and escalation needed.

Sources

• Consumer Federation of America – 2024 Consumer Complaint Survey
• Holland & Knight – Fifth Circuit Strikes Down FTC’s CARS Rule
• Cornell Law – Truth in Lending Act (15 U.S.C. 1640)
• FTC – Magnuson-Moss Warranty Act
• CFPB – Equal Credit Opportunity Act Resources
• NHTSA – Odometer Fraud
• FTC – Cooling-Off Rule
• USA.gov – State Consumer Protection Offices
• BBB AUTO LINE
• National Association of Consumer Advocates