SACRAMENTO, CA - Consumer groups warned that with more and more car dealers going out of business car buyers need greater protection from being ripped off.

Stephanie Feliciano is driving an 11-year-old Acura after being put through the legal wringer on a previous purchase of a used BMW.

"I actually thought I'd made out a good deal, you know? Everything was fine, drove off the lot," Feliciano said.

That's when the ordeal began with a startling discovery.

"It was very upsetting to me to find out that the trade-in had never been paid off. And it went on my credit as a repo," Feliciano said.

When asked what the dealer's explanation was for why they hadn't paid off her trade in Feliciano said, "They just said it was paperwork, misplaced paperwork."

Consumer advocates claim thousands of car buyers in California are falling victim to failing dealerships.

"Now it's a bloodbath. So we really need to get on top of this. California's the biggest car market in the country," said Rosemary Shahan, Consumers for Auto Reliability and Safety.

Shahan's group is backing a bill by San Leandro Sen. Ellen Corbett requiring dealers to pay off liens on trade-ins within two business days.

California's new car dealer association opposes the bill saying it would impose excessive new restrictions on the sale of used cars even as hundreds of dealerships are expected to go belly up this year.

The dealers said victims can already receive up to $35,000 from a special recovery fund set up for this situation. But consumer advocates said the fund is inadequate and that buyers need more protection.

"It makes no sense to have them going to dealers who are closing, ruining their credit, keeping them out of the car market," Shahan said.

Feliciano's current car reflects a lesson learned.

"And I had to buy cash because I'm too scared to go to a dealership to buy another car," Feliciano said.

Car dealers also oppose Corbett's bill because it would require them to operate with a $100,000 bond instead of the current $50,000. Many smaller dealers said they can't afford that.