Recent suit highlights scam aimed at migrants
The Arizona Republic
Jun. 9, 2006

Mel MelÚndez

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

"Scams targeting Latinos, especially recent arrivals who don't know English that well, has been a long-standing problem," said State Rep. Steve Gallardo, D-Phoenix. "And too often immigrants fear contacting the authorities to report the problem. So we need to teach them how to avoid these financial pitfalls."

Gallardo frequently hears of scams targeting Latinos, especially disingenuous 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. "You drive around and visit these used car dealers selling clunkers that you know are going to die the second they leave the dealer," he said. "But they make all these verbal promises to them in Spanish and then have them sign a contract in English that's nothing like they promised. It's reprehensible, this trickery."

Case in point?

Last month, the state settled a lawsuit with Prieto's Auto Sales on behalf of 18 Latino customers. The dealer operates stores at 4626 S. Central Ave.,
418 E. Broadway Road and 3450 W. Broadway Road and mostly advertises in Spanish language publications.

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. The dealer also targeted Latino consumers with poor credit or without a credit history, the lawsuit alleged.

"Sadly, we see stuff like this all the time," said Arizona Attorney General Terry Goddard. "The language barrier is the chief reason for fraud in auto-sales and real estate sales. So we always encourage people to not sign anything that they don't understand."

Last year, the Attorney General's Office received about 56,000 calls on fraud, with about 25,000 official complaints filed with the state agency.

Rita Prieto, president of Prieto's Autos Sales Inc., declined to comment.
But public records show Prieto's agreed to settle and pay $54,700 in state attorney costs and restitution to complainants.

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.

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

"Spanish speakers need to show caution," Goddard said. "Do not trust someone just because they speak Spanish. That doesn't necessarily speak of a person's character."

Still, many Latinos do, experts say.

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.

"This is why we stepped up education efforts targeting Spanish speakers, including translating more than 100 publications, operating a Spanish hotline, and launching Ojo!, our Spanish language Web site," she said.

In 2004, the federal agency 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 took place in Phoenix last July, with auto sale, apartment rental and home repair scams topping the list of attendees' concerns.

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

"It's a growing problem and one that we take very seriously," Dizdul said.