Does your Car Dealership Illegally “Swallow” Trade-in Value?

A federal class action filed in South Florida blows the whistle on a common deception car dealerships commit upon customers trading in their car to buy or lease another vehicle – a deception is known as “swallowing a trade-in vehicle.”

According to a recent press release, A dealer “swallows” a trade-in by failing to disclose in writing the trade-in’s value or how that value is applied to the purchase or lease transaction. As a result, the dealer avoids applying the value of the customer’s trade‑in to reduce the capitalized cost of the new car.

This abuse costs customers thousands of dollars in unwarranted interest and extra sales tax on their trade‑ins — essentially money they have already paid — allowing the dealer to surreptitiously pad its bottom line.

According to the 40-page class action complaint filed in U.S. District Court, Porsche unabashedly permits its dealers nationwide to “swallow” their customers’ trade‑ins, thereby violating federal and state consumer protection laws.

“If you traded in your car to lease or buy a Porsche—or any other car—it is easy to uncover if the dealer ‘swallowed’ your trade-in,” says Mark Schweikert of Weil Quaranta P.A. “Check your lease agreement. If your trade-in had positive equity yet the lease agreement shows that the ‘Net Trade-In Allowance’ is blank or marked ‘N/A,’ your car was likely ‘swallowed,’ you got a bad deal, and the dealer probably violated the law. With this suit, we are taking on an industry practice we believe is widespread.”

The nine-count suit accuses Porsche and its affiliated financial, leasing, and dealership entities of violating the federal Consumer Leasing Act, the Florida Deceptive and Unfair Trade Practices Act, and Florida common law.

Weil Quaranta partner Ron Weil says he suspects this predatory practice is common yet likely goes unnoticed, given many consumers’ unfamiliarity with complex lease calculations and the high-pressure sales tactics that typically accompany a visit to a dealership.

“This is a good time for anyone with an existing lease or recent purchase to look at how their dealer applied their trade-in to the transaction,” Weil says. “Anyone considering a lease or purchase should ensure the dealer is following state and federal consumer protection laws. Information is a consumer’s best weapon.”

Read the full New Federal Suit Against Porsche Sheds Light on Illegal Trade-in Practice press release.

CONTACT: Mark Schweikert & Ron Weil, Weil Quaranta P.A. 305-372-3532, mschweikert@weilquaranta.net, rweil@weilquaranta.net.