On September 23, 2011, CNBC ran a story on the growing incidence of car buyers becoming scam victims. FBI statistics show auto-related fraud complaints on the rise; every hour a car buyer loses more than $1,000.
According to experts at the online car sales company cars.com, sellers are also targets. Cars.com employs a fraud team to help weed out fraudulent ads on its website.
"The number one piece of advice we can give buyers and sellers is to listen to that inner voice that says, 'This is too good to be true,'" says the site's spokesperson, Ron Hall, "because we've found that it always, always is."
The cars.com fraud team put together this list of the most common scams:
A thief poses as a car buyer and responds to your ad, then "accidentally" sends you a check for an amount higher than the selling price of the vehicle. He or she then requests that you, the seller, deposit the check and return the difference via wire service such as Money Gram or Western Union. Once you wire the money, you learn the buyer's check is worthless, and the thief has disappeared with your money. The Snopes page dedicated to check scams recommends waiting three weeks for any sizable check to clear. Funds may appear to be available in your account before that time, but checks could still turn out to be counterfeit. Be sure the funds are really available and not just showing as deposited.
A thief posing as a seller tells a potential buyer a sad story about why he or she needs to sell the car quickly. The story is always plausible and explains why the car's asking price is so much lower than its current market value. The story also puts pressure on the buyer to make a quick decision. Buyers who fall victim to this scheme can end up with a lemon or with no car at all.
This is targeted at buyers. The thief poses as someone selling a vehicle and requests a deposit in exchange for a promise to ship the vehicle to the potential buyer for personal inspection within a set number of business days. Thieves tell prospective buyers a third-party shipping company will contact them to ship the car after the deposit is sent via wire service. Scammers often use forged or copied websites to appear legitimate.
Purchase Protection Plan Scams:
In this scheme, the con artist pushes a protection plan that supposedly protects the buyer if the vehicle is not received. The "seller" often presents it as a way to eliminate the risk of buying something sight unseen from a stranger. The potential buyer is asked to send a deposit for the full purchase price of the vehicle. The "protection plan" claims that if the buyer does not receive the vehicle, he or she will be reimbursed for the total amount of the transaction invoiced. Scammers who employ this tactic often use fake websites that mimic real websites such as eBay, Edmunds, Google Checkout, Cars.com and NADA Guides that customers are comfortable with.
Photo (Online) Scams:
In this scam, a vehicle is listed online, with the text giving a normal market rate of, say, $13,000, while the photo accompanying the ad displays a price of $4,000. The thief tells the potential buyer the price of the vehicle is $4,000, saying it was reduced for some plausible-sounding reason such as a recent layoff or death in the family, designed to elicit sympathy. The victim pays the reduced rate thinking it's a bargain, but then never receives the vehicle. This type of scam shows up frequently on craigslist.com.
A potential buyer responds to an ad for a vehicle that is for sale locally, and is told the car is located somewhere else other than its advertised location. The scammer tells the potential buyer the car can be shipped to the buyer for a fee. The victim pays but never receives the car, and the thief gets away with the "fee"" This is also a common craigslist.com scam, and the same ad will appear as a local sale on craigslist sites for cities across the country.
Sign Unseen Scams:
Fraudulent sellers make up a story about why they can't physically show the vehicle due to unforeseen circumstances, such as traveling for work or being away on active military duty. The seller requests that payment be sent in full and advises that the title will be sent when the vehicle is shipped.
Wire Service Scams:
Scammers love wire services such as Western Union and Money Gram because financial transactions can be conducted anonymously and the recipient doesn't have to offer any proof of service rendered or goods exchanged to collect the cash. In auto sales, a potential buyer receives an invoice stating that wire services can be used to complete transactions online, and advising that this is the most common payment method. If the supposed car seller doesn't recommend using a legitimate escrow service such as Escrow.com to complete the transaction, suggest it yourself. If they refuse, end the conversation and keep looking.
In an auto sales phone scam, the thief provides a contact phone number for potential buyers to use to inquire about the vehicle for sale. Scammers might enter a fax line or a number they've just made up. The potential buyer is then forced to email, and the fraudulent seller informs the buyer that they prefer to do business over email anyway. The scam proceeds from there.