Dealer Sells A Customer's Mustang To A Fraudster, Then Expects His Insurance To Cover The Loss

It seems like there’s almost never a time when a car dealership doesn’t do something wrong. From selling a car that a customer brought in for repair to taking a customer’s money and then making them go through hell to get it back, even simply doing what they’re in business to do can turn into fraud. San Antonio’s KENS 5 reports how one dealership lost a customer’s vehicle to fraud and then expected his insurance to cover it.

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Back in 2022, Felipe Villarreal purchased an orange 2020 Ford Mustang Shelby GT500 from a Las Vegas dealership for $90,000. He says it was his dream car. Not long after purchasing it, Villarreal found himself in financial trouble and needing money. That’s when he decided to do a ​​consignment sale on the GT500, as he described to KENS 5.

Unfortunately after the record inflation in 2022 and several medical bills, Villarreal just could not justify the loan he still owed on the vehicle. In October of 2023, Villarreal signed a deal with Hovey Motorcars in Boerne to do a consignment sale. Villarreal said the dealership had been around for many years and specialized in dealing with “high-end” cars. “Based on their history, and working on these expensive cars, I figured it was a good fit,” Villarreal said. “The car was parked in the showroom floor as we agreed. There were no test drives.”

Nearly a month later, Hovey Motorcars called Villarreal, saying that they had “good news and bad news.” It was all bad news, though. Hovey said they lost the car in a scam deal and had no money to show for it, saying a “fraudulent buyer” had taken the GT500. In a statement to KENS 5, Hovey Motorcars owner Rick Hovey Jr. described what happened, weirdly calling his dealership a victim in this as well.

On 10-20-2023, a suspect made a $10,000 down payment on the car, obtained auto insurance, and was subsequently approved for a loan to finance the balance. Five days after the down payment was made, and one day after the loan transaction was completed, Hovey Motorcars received a letter informing us that the down payment was made using a stolen credit card. We immediately reported this to the Boerne Police Department. Despite our diligent efforts and our twenty-six years of business experience, we became victims of theft and fraud in this instance.

Villarreal says he went to the dealership expecting either his insurance or the dealer’s would cover the car’s loss. That’s when Hovey told Villarreal he’d need to file a claim with his insurance, and it’s all because of a contract Villarreal signed.

The contract states that Villarreal declared “to have in affect full coverage insurance and acknowledge that I am totally responsible for all damages, repairs, and/or theft that might occur to said auto.

It looks as if Villarreal is screwed on both sides. Hovey Motorcars says their insurance doesn’t cover the loss of the vehicle because they didn’t own it. And Villarreal’s insurance has a clause saying it doesn’t cover consignment sales. Insurance Council of Texas Communications Director Rich Johnson confirmed to KENS 5 that most private auto insurance doesn’t cover consignment sales. A consumer protection attorney told KENS 5 that Villarreal could sue Hovey Motorcars, but he’d have to prove that the dealer was negligent. A police report could help, but it still hasn’t been released by local police.

Villarreal is now stuck paying the remaining $60,000 loan on a car he doesn’t have anymore, hoping that things work out in his favor. “It feels like someone hit you really hard in the gut,” he told KENS 5.