Shady Car Dealers Targeting Military Buyers

Cody Cameron, a Marine stationed in Jacksonville, N.C., got burned when he bought a used car. He paid $17,000 last year for a 2004 Nissan 350-Z with 60,000 miles on it. He figured the car would last him a long time. It didn’t.

“I drove the vehicle for about two weeks. And one day all of the wheel studs on the left rear tire just popped off and the tire took off down the road,” he recalls.

He was able to get the dealership to pay for the repairs. But about a week later, the studs broke again. This time they refused to pay.

Cameron couldn’t afford the repair work, so he took the car to another dealer, hoping to get some money for a trade-in. That’s when he discovered his car had been in a wreck. The AutoCheck report showed extensive damage to the left side of the vehicle.

“When I bought it, I specifically asked the salesman – multiple times – if it had been in a wreck,” Cameron tells me. “And he said no. There were no accidents.”

Right now, Cameron’s 350-Z cannot be driven. But he’s still on the hook for the payments. He’s suing the dealer.

It’s a common problem
It’s unfortunate. Shady car dealers often target military customers. Unethical salespeople see them as easy marks.

Holly Petraeus, director of the Office of Servicemember Affairs at the Consumer Financial Protection Bureau, warns military personnel to be on guard when they walk onto a car lot.

“You have these car places that spring up around military installations selling used cars for a very marked-up price and then putting high financing on top of that,” she says.

Military personnel can be especially vulnerable customers. They’re young. This may be their first car purchase. They often have a limited or negative credit history.

Petraeus (whose husband, Gen David Petraeus is CIA Director) tells me everyone in the service is afraid of doing anything that could cost them their security clearance. A bad credit report is the No. 1 reason for having that clearance pulled.

“They’re very conscious of that,” she says. “So somebody can threaten them and say, ‘If you don’t pay up then you’re going to get in trouble,’ which of course, is the last thing they want.”

Holly Petraeus is not the only one sounding the alarm. The auto experts at advise military customers to watch out for deceptive sales practices.

"Military personnel have a steady income. The government is paying them every single month for their service. Unscrupulous car dealers know that and are really anxious to get into that income stream,” says’s Carroll Lachnit. warns military families to be on the lookout for crafty salespeople who use patriotism as part of their sales pitch.

"We're trying to get them to be aware that appealing to their pride or flattering them may not be sincere appreciation for their military service, but just another way to get their hooks into that paycheck,” Lachnit says.

Car dealer rip-offs affect mission readiness
Rosemary Shahan, president of Consumers for Auto Reliability and Safety, has a long list of “unconscionable practices” she says unethical dealers use on military buyers. They include: falsifying loan applications, bait-and-switch financing and selling a car they know has been in a wreck without telling the customer.

“Auto sales and financing scams are leading causes of financial readiness problems for military service members and their families,” she says.

Two years ago, while Congress was debating the Dodd-Frank bill on financial reform, Air Force Secretary Michael Donley wrote a letter to lawmakers. It said:

“I'm sure you agree that Airmen who are distracted by financial issues at home decreases readiness. Protection from unprincipled automobile lending enables our Airmen to concentrate on their primary mission -- fly, fight and win in air, space and cyberspace." (See full letter)

In a similar letter, John McHugh, Secretary of the Army wrote:

"Over the years, many of our Soldiers have fallen victim to predatory lending practices and have entered into contracts for prohibitively expensive financial products promoted by some unscrupulous car dealerships and lenders. Though the Army does educate our Soldiers about buying cars in our normal financial education curriculum, the fact remains that junior enlisted Soldiers … remain an easy target for dishonest brokers.” (See full letter)

McHugh’s letter listed the results of an informal Department of Defense survey of officers who do financial counseling for the four main branches of the armed forces. The vast majority (79 percent) reported they were seeing military members with auto financing problems. Many of these clients, they reported, worried they could not make their car payments.

The National Independent Automobile Dealers Association(NAIDA) does not shy away from the problem.

“Try as we may to get rid of them, there are still bad actors in our industry,” says Steven Jordan, NIADA’s chief operating officer. “We are aware of the growing issue regarding vehicle purchases and financing by military personnel and we feel there is no place in our industry for those who wish to take advantage of or deceive our military personnel with improper disclosure or unfair & deceptive trade practices.”

Protect yourself
There are things everyone – military and civilian – should do when buying a vehicle.

Do your homework. Check out the dealership. Talk with friends and go to the Better Business Bureau website. Learn the actual market price of any vehicles you are interested in. It’s easy. Just go to, Kelly Blue Book or TrueCar.
Never shop alone. You should always have someone there to watch your back. Remember, dealership salespeople do this every day for a living. No matter what they say, their job is to get the most money possible on every transaction.
Don’t let anyone pressure you into signing the sales contract. Once you sign it, the vehicle is yours and you are legally required to make the payments. There is no three-day “cooling-off period” for car sales.
Never buy a used car until you have it inspected by a qualified independent mechanic. They can spot damage from a previous wreck or potential mechanical problems. The small price you pay for this inspection (normally $100 to $150) could save you literally thousands of dollars down the road.

More detailed advice for U.S. service members is available at “Boot Camp for Military Car Buyers.”

You can also read my car-buying tips at