N.J. used car industry still rife with abuse, agency says

Three years after a state agency found that New Jersey's used-car industry was rife with fraud, consumers continue to get ripped off by unscrupulous dealers, investigators say in a new report.

Buyers have spent thousands of dollars for vehicles that "turned out to be thinly disguised piles of junk," the report says, and some dealers continue "to evade sales tax, to commit insurance fraud, and to sell access to dealer credentials to unlicensed individuals."

In its report Tuesday, the State Commission of Investigation (SCI) said it had conducted a follow-up inquiry to its 2015 investigation after lawmakers in Trenton tried to relax industry rules despite the agency's findings of rampant abuse.

That legislation — which had passed the Assembly by a unanimous vote and advanced out of a Senate committee — died in June 2017 after the Inquirer and Daily News reported that the bill had been championed by a South Jersey dealer with alleged mob ties. The legislation was reintroduced in the Senate in February this year, but it has not advanced.

SCI's scrutiny of the used-car industry has focused on multi-dealer locations, which are basically landlords that lease space to dealer-tenants. The arrangement enables dealer-tenants to obtain used-car dealer licenses in New Jersey even as they conduct most of their business in states like New York, where stricter rules make it more difficult for them to get government approval.

The biggest multi-dealer location in the state is the Bridgeton, Cumberland County-based New Jersey Dealers Auto Mall (NJDAM), which SCI described in its 2015 report as "the foundation for an amalgam of consumer and bank fraud, unpaid taxes, suspicious financial transactions, and other questionable, unscrupulous and possibly illegal activities."

NJDAM has denied wrongdoing and ties to organized crime. Representatives did not respond to a request for comment on the new report Tuesday.

The Inquirer and Daily News found in 2017 that even after SCI published its initial report on the industry, a lobbying firm hired by NJDAM pressed the state Motor Vehicle Commission to issue licenses to dealers that owed the state at least $132,188.39 in unpaid taxes.

The Motor Vehicle Commission declined licensure to some but renewed it for others.

In its report Tuesday, the investigative commission highlighted complaints filed by consumers who bought defective cars but were unable to obtain refunds or recover repair costs because they purchased the vehicles "as is." Under New Jersey law, consumers bear the cost of any repairs in any such transactions.

Some consumers were New York residents who filed complaints in that state, only to find that they were out of luck because the dealers were licensed in New Jersey.

SCI, an independent fact-finding agency, recommended the state strengthen its consumer protection laws. California and New York, for example, require dealers "to provide written disclosure prior to a sale certifying that a vehicle is in good running order and meets basic safety requirements," according to the report.