NCL Personal Finance Issues
When it comes time to buy a car, consumers are more empowered than ever thanks in large part to the Internet and its offerings of car reviews, online vehicle history reports, detailed car listings, and more. The Internet has also, unfortunately, given scammers a new venue to find auto-buying victims.
One car-buying venue that consumers are increasingly turning to is online classifieds sites such as Craigslist. There are many advantages to using such sites to purchase an automobile, most notably cutting out the dealership middlemen. Unfortunately, NCL’s Fraud Center also hears frequently from consumers who have fallen victim to fraud when purchasing a car via these services. Different scams tend to affect buyers and sellers. Here are some of the more common variants, though this list should not be considered exhaustive, as con artists are among some of the more inventive criminals out there.
The “Price Too Good to Be True” scam
In this scam, a prospective buyer sees an attractive-looking car (often a classic or exotic car) for a price well below market value. When the buyer contacts the seller, he or she is notified that the seller and the car is outside of the country and will arrange for shipment of the car upon receipt of payment, most often via wire transfer (such as Western Union) or bank-to-bank transfer (for very large payments). When the money is transferred and collected, the “seller” breaks contact and the buyer is out the money.
The overpayment scam
A legitimate seller posts a car for sale. He or she is then contacted by a prospective “buyer” (really a scammer) who offers to send a cashier’s check immediately plus additional funds to cover shipment of the car overseas. When the check arrives, the seller is instructed to deposit it and wire the overage to the “shipper.” When this is done and the wire transfer picked up, the “buyer” breaks contact and the seller is left on the hook to their bank for the fraudulent check and the missing funds.
Many consumers are rightfully wary of sending large amounts of money to someone they’ve never met. Scammer frequently recommend the use of fake “escrow” services that will hold funds involved in the transaction until both parties are satisfied that the transaction has been completed. In a typical scam, a legitimate buyer will be approached by a scammer selling a car (again, often an exotic or classic car priced, but usually priced well below market value). The scam seller will offer to ship the car and that there is no risk of fraud due to the “escrow” service (purportedly eBay, PayPal, or another service). Once the money is transferred, contact is broken (or sometimes additional funds are requested to cover “unforeseen” events). In any case, the legitimate buyer never receives a car and loses their money.
How to avoid car-buying scams
- NEVER wire money or use a bank-to-bank transfer in a transaction.
- ALWAYS try to deal locally when buying or selling an automobile or other high-value merchandise
- DO NOT sell or buy a car from someone who is unable or unwilling to meet you face to face.
- NEVER buy a car that you have not seen in real life and had inspected by a professional. A vehicle history report may also be a good idea, though scammers have been known to use fake vehicle identification numbers to defeat this countermeasure.
- WAIT until a check (personal, cashier’s, certified, or otherwise) has cleared the bank to transfer title or the car itself. Funds being made available by a bank DOES NOT mean the check is not counterfeit. Clearing a check can take days or weeks depending on the financial institutions involved. Check with your bank about their particular processes for clearing checks.
- NEVER trust a seller or buyer who says that the transaction is GUARANTEED by eBay, Craigslist, PayPal, or other online marketplace. These sites explicitly DO NOT guarantee that people using their services are legitimate.
- BEWARE sellers or buyers who want to conclude a transaction as quickly as possible. Scammers want to get your money before you have time to think or have a professional examine the deal.
- CALL the buyer or seller to establish phone contact. If the buyer or seller seems to neglect details agreed to via e-mail or is unable to answer questions about their location or the location of the automobile in question, it is likely to be a scam.
- ALWAYS trust your gut. If a deal feels “fishy” or sounds too good to be true, it probably is. Plenty of people use online classified ads to buy and sell cars every day. The vast majority of these transactions are legitimate and go smoothly. Losing out on a “great” deal in order to work with someone you trust could save you big in avoiding a possible scam.
If you feel you or someone you know has been a victim of a car-buying scam, report the scam to NCL’s Fraud Center at www.fraud.org.