Capital One Auto Finance Sues Missouri Dealership for Fraud

Capital One Auto Finance filed a lawsuit against Cape Girardeau, Mo.-based Coad Toyota claiming $619,690 in damages for allegedly misrepresenting facts about vehicles sold and falsifying down payments and sales tax in 34 instances, according to court documents filed Dec. 21, 2018.

In one example cited in the lawsuit, the dealership allegedly supplied information to the lender indicating that the borrowers made a cash down payment when, in fact, they did not. The dealership further declared that the vehicle sale included $5,000 in sales tax. However, the Missouri Department of Revenue estimates that the sales tax should have been $1,365.96, according to the court filing.

Of the 34 instances outlined in the lawsuit, at least seven were related to “power booking,” or a dealership’s practice of falsifying the features and options on the vehicle to inflate its value. “Power booking” manipulates the risk analysis that a lender performs to decide whether to purchase receivables and to induce the lender into buying the receivables, according to the suit.

Capital One said it “reasonably relied” on Coad Toyota’s statements because they were not “exaggerated or beyond belief” and because the dealership made the statements in the regular course of business and dealings with the lender, according to the lawsuit. However, Capital one was induced into purchasing receivables it otherwise would not have purchased or would have purchased under different terms, the lawsuit claims.

A timeline for the case was not provided in court documents. Capital One did not immediately respond to requests for comment.