Unlicensed Vehicle Dealers Create Problems for Unsuspecting Buyers

ADOT Office of the Inspector General investigates illegal car sales

PHOENIX – Motor vehicles are sold in Arizona primarily through dealers licensed by the state, by private parties and unfortunately illegally by unlicensed dealers. The Arizona Department of Transportation Office of the Inspector General investigates the illegal sale of vehicles and has conducted more than 250 investigations this year into the fraudulent activities. Approximately 15 percent of those cases involved investigations into vehicles sold by unlicensed dealers.

Vehicle purchases from unlicensed dealers don’t have the same protections of state law should problems occur with the sale. Problems may range from the seller not providing the vehicle title, the vehicle has a rolled-back odometer, or the seller is not the owner or not legally able to sell the vehicle. Additionally, the vehicle may be recorded as stolen or possess a fictitious vehicle identification number – both situations which will prevent the buyer from transferring ownership into their name. Also, the vehicle may be in need of expensive repair work not disclosed at the time of sale.

An unlicensed dealer is someone who ADOT has reasonable cause to believe is engaged in the business of selling motor vehicles without being licensed as required by state statute. According to Arizona law, an individual may sell only up to six vehicles in a continuous 12-month time period without a dealer’s license.

A licensed new, used or public consignment auction motor vehicle dealer is authorized by Arizona law to buy, sell or auction motor vehicles as its regular business. There are some protections by law for buyers who purchase vehicles sold by licensed dealers. Individuals can check the Dealer Licensing Services section of the ADOT website, azdot.gov, to learn if a business or individual is a licensed dealer.

The ADOT Office of the Inspector General recently completed some major investigations involving unlicensed dealers. Those cases have been sent forward to the ADOT Executive Hearing Office requesting enforcement action and civil penalties against the unlicensed dealers. The cases involved approximately two months of investigation which uncovered 23 motor vehicles that were illegally sold. The suspects in these cases were assessed administrative civil penalties by the ADOT Executive Hearing Office in the amount of $12,000. According to state statute, a civil penalty of at least $1,000 but not more than $3,000 may be imposed per violation and the violator shall be required to pay all transaction privilege taxes on all illegal motor vehicle sales.

Detectives with the ADOT Office of the Inspector General conduct criminal and administrative investigations relating to criminal forgery; identity theft; fraudulent activities involving state-issued motor vehicle title/registration documents and driver licenses; stolen vehicles; and transactions conducted by licensed and unlicensed car dealers. Additionally, detectives provide a multitude of investigative support services to law enforcement agencies statewide, nationally and internationally.

The ADOT Executive Hearing Office is a branch of the ADOT Office of the Director, and conducts independent administrative hearings regarding activities outlined in the Arizona Administrative Code Title 17 and the Arizona Revised Statutes. One of those functions is to rule on civil actions against alleged unlicensed vehicle sales.

For additional information about ADOT, please visit: azdot.gov.