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Did you buy a vehicle from a local dealership only to find out later you were defrauded in some way? Can’t afford an attorney to help?

Fortunately, there’s another, completely unpublicized way car buyers can get compensation for a fraudulent deal committed by a dealership.

Surety bonds

Colorado law requires every licensed motor vehicle dealer to carry a surety bond. The bond is meant to protect customers from fraudulent business practices.

A surety bond guarantees financial compensation to customers who incur monetary loss as a result of an auto dealer’s fraud, negligence or failure to comply with all of Colorado’s laws and ethical guidelines that govern the sale of vehicles.  In order to get a dealer’s license from the state, all dealerships must purchase a surety bond to the amount of $50,000. Individual salespeople must also be bonded, to the amount of $15,000.

If you have evidence that a dealership committed fraud in your deal, for example if you found forged signatures on contracts or agreements, found extra charges were added were to your contract without your knowledge, the dealership submitted false information about your finances and the vehicle you were buying to lenders on your credit application (like inflating your gross salary or the length of time you’ve lived at your current residence, or claimed to lenders that your vehicle has fancier features like leather seats and a sunroof when it doesn’t), or if you were charged a higher interest rate than expected on your loan without your knowing, or if you were charged a higher price than the advertised price, or if the dealer told you had to buy additional products in order to buy the vehicle you wanted, or if the dealership submitted fake utility bills in your name to lenders, you can make a claim against the dealership’s surety bond to recoup the loss you incurred from the fraud.

How to file a claim against a dealership’s surety bond:

1) Identify the insurer that sold the dealer the bond**,

2) Contact the insurer and ask them to tell you their procedure for filing a claim,

3) Gather evidence of the fraud, for example the documents from your sale, your credit application, dates and times the fraud happened, the names of employees involved, copies of your signature if you think your signature was forged, a full description of what happened, the amount of money you are out because of the deal and the basis for the figure, and submit it all to the insurer with a letter saying “Dealership [fill in name]” defrauded you and you want to make a claim against the dealership’s surety bond.

The insurer will investigate your claim and pay you after they verify the facts of the case.

**How do you find out which insurer holds a dealership’s surety bond?

It’s public information that’s buried on the Auto Industry Division’s website. Here’s how to find it:

1. Go to sbg.colorado.gov/auto-industry
2. Scroll down to the blue “Quick Links” bar and click on it for the drop-down menu.
3. Click on the link for”Active Facility License Listings.”
4. In the bulleted sentence right below the page title, click on the blue link for “Active License Lookup.”
5. In the Active License Lookup web form, click the blue link in the third bulleted sentence that says “Click here to search for a facility instead of a person.”
6. In the facility search form, type the name of the dealership. [Hint: For the best result, use broad search criteria. For example, if you’re looking for Red Rock Nissan, just type “Red Rock.” If you’re looking for Grand Valley Auto, just type “Grand Valley.”]
7. 

   Mug shot of Tiffany Momilani Miller, former Red Rock GMC financial manager, who was arrested for forgery, criminal impersonation and identity theft last year

   In the search result box, click on the blue name of the dealership.

8. Scroll down to the dealership’s “License Bond Information.” You’ll see the name of the company that holds the bond for the dealership, and the bond number, which is like an insurance policy number.
9. Put the name of the bond issuing company into a Google search to get the company’s contact information. Call the company and ask them to tell you their process to file a claim against a dealership’s surety bond.

Surety bonds protect customers from financial losses they incur from doing business with an unscrupulous auto dealer. It’s free to file a claim against a dealer’s surety bond, so if you were defrauded in the course of buying a car, file a claim to get compensation for the fraudulent deal. The bond company will pay you and then seek reimbursement from the dealer.

Also…Report the fraud to law enforcement

Dealers that use fraudulent practices will continue doing so until they get caught and sent to jail, because they make a lot of money off such crimes.

First, report the crime to the Colorado Dealer Board by filing an electronic complaint online with the Colorado Department of Revenue’s Auto Industry Division. 

So far, the City of Grand Junction has had the best track record of arresting bad actors in the car dealerships here. The Grand Junction Police Department Financial Crimes Reporting form is here.(pdf)  If you were the victim of fraud at a

dealership inside city limits, fill out the G.J.P.D.’s financial fraud packet, file it with the G.J.P.D., meet with a cop to explain how you were defrauded, and include a copy of your fraud packet with the documents you send to the surety bond company.

You can also report the crime to the Colorado state Attorney General as an automotive complaint and write reviews on sites like Google Reviews, Yelp, Cars.com, the Better Business Bureau, etc.

The more records you make of the crime and the more such crimes get reported, the better off everyone will be, and the easier it will be to make a solid case to the surety bond provider so you can get your money back. And it’s free to do all of this, except for the time it takes to do it.

Note that all of the crimes in the following video have been committed locally by a notorious auto dealer that has five stores in Grand Junction, so it pays to know how to make a claim against a dealer’s surety bond to get compensation for a financial rip off: