In 2003, automotive experts estimate over 380,000 new vehicles (Thompson, 4) and nearly 356,000 used vehicles ("Used Car Market Report", 65) were sold in the United States, not including those used vehicles sold outside of a dealership setting. With new vehicles averaging $22,000 and used vehicles averaging $8,130, the combined economic impact for car sales in 2003 was over $11 billion (BTS, Table 1). Clearly, the automotive industry is a primary source of economic stability for the United States.
             However, due to the unique aspects of the automotive industry, there are also numerous circumstances in which fraud can easily be committed. Car manufacturers determine, if defects are found, whether such defects are worth recalling vehicles in comparison to possible law suits regarding injuries due to defects. Legally, the car manufacturer is not required to recall the product. Used car sales, while regulated, often occur without legal disclosure of factual information, such as previous damage to the vehicle, since private owners can sell their vehicles "as-is", with no guarantee of operation. Additionally, since some vehicles are sold through car dealerships, there are vastly more opportunities for dealers to commit fraud, in terms of vehicle disclosure, financing, and vehicle tampering.
             This paper will discuss common areas of fraud found within the automotive industry, examining both the new and used car sectors. Additionally, this paper will discuss the symptoms often noticed as a result of these frauds, how certain types of fraud is discovered, and how these frauds can be prevented. Finally, this paper will discuss the economic impact of fraud within the automotive industry. Combined, these topics will show that while fraud within the automotive industry is rampant, and dangerous, well-informed consumers can avoid such fraud and help protect themselves as well as prevent the drastic economic impact of fra...