Hispanic consumers warned of scams
The Arizona Republic
Jun. 19, 2006

Financial-literacy efforts are urged

Mel MelÚndez


The recent lawsuit settlement against a Phoenix used-car dealership accused of deceiving Spanish-speaking Latinos shows the need for financial-literacy education efforts, especially among immigrants, local activists said.

"Scams targeting Spanish-speakers is nothing new. This is a long-standing problem," said Rep. Steve Gallardo, D-Phoenix. "So, we need to do a better job of educating our own on these finance matters, so they'll feel empowered enough to walk away."

Gallardo frequently hears of scams targeting Latinos, especially sneaky auto and home sales, mortgage lender rip-offs, and apartment-rental and home-repair swindles, he said. Used-car fraud likely tops the list of scams targeting immigrants, he added. "They (dealers) know they're not going to report them, so they make all these promises that never make it onto paper,"
he said. "The stunts they pull are amazing. Truly heinous behavior."

Prieto's Auto Sales, which operates three sites in Phoenix, recently agreed to pay nearly $55,000 after the state sued on behalf of 18 Latinos who reportedly bought defective autos from the dealership or were cheated out of their deposits, according to the suit.

Prieto's mostly advertises in Spanish-language publications, such as Segunda Mano (Second Hand), and targets Latinos with poor credit or without credit history, according to the lawsuit.

"Spanish-speaking consumers need to beware," Arizona Attorney General Terry Goddard said. "Just because someone speaks to them in Spanish doesn't mean they're automatically trustworthy. Tragically, we see this all the time."

Rita Prieto, president of Prieto's Autos Sales Inc., declined to comment.
But public records show Prieto's agreed to settle and pay $30,000 in state attorney fees and costs and $24,700 in restitution to complainants. Prieto's operates stores at 4626 S. Central Ave., 418 E. Broadway Road and 3450 W.
Broadway Road.

According to the lawsuit, Prieto's sold defective autos, forged signatures on loan documents, refused to honor warranties and implied customers could finance the cost of their vehicles, knowing they wouldn't qualify, and then pocketed their cash deposits.

As part of the settlement, Prieto's also agreed to not sell vehicles with substantial defects, to make promised repairs before releasing vehicles, to return down payments when customers can't obtain financing, and to comply with Truth in Lending Act requirements.

But Prieto's is not alone.

This was the second settlement with car dealers negotiated by the state this year; five agreements were reached in 2005, state officials said.

The Arizona Attorney General's Office last year received 25,000 complaints, and used auto-sale complaints led the pack.


Hispanics prime targets
Because of this "instant" trust factor, Latinos are twice as likely as
others to be the victims of consumer fraud, according to a 2003 study by the
Federal Trade Commission, which enforces federal antitrust and consumer
protection laws.

"There is a tendency among Latinos to trust our own," Gallardo said. "And
these scam artists take full advantage of that."

Language, cultural barriers, immigration status and lack of trust in the
government often make Latinos - who have a national estimated buying power
of $700 billion - ideal targets, FTC spokeswoman Jackie Dizdul said.

In 2004, the federal agency launched its Hispanic initiative, including
translating more than 100 publications, operating a Spanish hotline, and
launching Ojo!, its Spanish-language Web site.

"Ojo! gets about 150,000 hits each month," Dizdul said. "That shows what a
growing problem this is."

The agency also partnered with the U.S. Attorney's Office and the U.S.
Postal Inspection Service to hold forums throughout the country to help
educate Latinos.

One of the first forums was last July in Phoenix, with auto-sale,
apartment-rental and home-repair scams topping the list of attendees'
concerns.

Since it launched its initiative, the FTC has filed more than 35 law
enforcement actions against companies targeting Latinos.


Many cases not reported
Most of those cases include Arizona claimants because advertisements for the
bogus products or services ran on national Spanish-language networks, radio,
magazines and local newspapers.

Still, many fraud cases go unreported, Dizdul said.

"That's a problem," she said. "We can't pursue enforcement unless we hear
about them. So, we encourage anyone who fears they're a victim of fraud to
report it."