Equity skimming on vehicle sales and leases - a practice that has victimized numerous consumers in the past year - became a crime this week.
As of Monday, anyone caught receiving a fee to sell or lease a vehicle must fulfill his part of the transaction within 30 days or be guilty of a third degree felony.The Legislature approved the penalty during its past session after the state Motor Vehicle Enforcement Division expressed concern over the number of complaints from equity-skimming victims.
"It has been a problem within the past six months. We were getting about four to five calls a day," said Bob Hoffman, division program manager for licensing and regulation.
Hoffman said the typical equity skimming scheme starts when a consumer unable to make payments on a car tries to sell it by placing an ad in the classified section of a newspaper.
An individual responding to the ad offers to act as a broker and find a buyer for a fee, ranging from $500 to $800.
The problems arise when the broker takes the fee and then doesn't sell the car, leaving the seller responsible for monthly payments and accident liability for the vehicle. In some instances, the broker will take a fee from a potential buyer and then not find a car for the buyer to purchase.
Sometimes, instead of selling the vehicle, the broker will lease it to someone with bad credit and who can't qualify for a car loan. But if payments aren't made or the vehicle gets into an accident, the seller remains responsible.
To prevent consumers from becoming victims of equity skimmers, the new law requires the broker to facilitate the purchase of the vehicle by himself or someone else within 30 days of receiving his fee.
Hoffman said the best advice for consumers to avoid equity skimming is to sell your car yourself; don't give it to someone to sell.