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SEC Investigating Fiat Chrysler for Car Sales Fraud

» Posted October 10, 2016Resources | Share This Post

Many consumers are rightly worried when they buy a car because they are concerned that car manufacturers and car dealers are not honest. There is ample evidence to support this conclusion, from vehicle defects that dealers knew about to frequent reports of arrests of unscrupulous car dealers. 

While there are consumer protection laws aimed at protecting purchasers of new cars in case of repeat defects, even taking advantage of these laws can require the help of a California lemon law attorney due to the complexity of the laws.  Consumers need to be aware of the risks and try to be proactive in protecting themselves.

Unfortunately, even some of the biggest and best known names have been accused of wrongful behavior at various times in recent months and years. For example, NPR reported recently that Fiat Chrysler was under investigation for suspected fraud in connection with car sales.

Car Dealer Under Investigation for Fraud

According to NPR, the fraud that Fiat Chrysler is accused of involves dealers falsely reporting the number of vehicles that were being sold.  Fiat Chrysler had faced questions from the Department of Justice on a similar issue in the past. FBI agents also visited the homes of regional managers for Fiat in order to gauge the extent of their alleged involvement in the potential scam.

Now, Fiat Chrysler has indicated that the company is also cooperating with an investigation spearheaded by the Securities and Exchange Commission (SEC).  The SEC believes Fiat Chrysler was dishonest in its financial disclosures provided to investors because it reported on its sales based on shipments made to dealers, rather than based on actual sales to customers.

NPR reports that various other news outlets have reported on ongoing problems with honesty on the part of Fiat Chrysler. For example, one report indicated that the Justice Department investigation was centering its investigation around a lawsuit an Illinois dealer had filed alleging Fiat Chrysler had “manipulated” the data on new vehicle sales.

New vehicle sales are described as a “crucial measure for determining an auto manufacturer's operation.” There are reports made monthly by dealers on their new sales, and these reports can affect everything from the regulations imposed by government to issues with the union to stock prices. 

Fiat Chrysler appeared to have been exceptional in terms of its new sales record since leaving bankruptcy in 2009, with 75 months of year-over-year sales increases. This “exceptional” record may not actually be a sign of an improved business outlook, but may instead simply be the result of dishonest statements made in financial disclosure paperwork.

While this particular fraud may be more damaging to investors than car buyers, it is important for consumers to recognize that car manufacturers can be dishonest, so consumers can remember not to trust them. Consumers should be sure to know about the legal protections they could take advantage of if there is a problem with their vehicles. A lemon law lawyer in California can provide assistance for consumers when needed.

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Posted By: Clay Coker