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Tips for Spotting and Avoiding Fraud When You Buy a Car Online

Subscribe September 07, 2009
Fraud and scam prevention

By Eric Weinkam © 2009, All Rights Reserved

If you've never been a victim of fraud, you're lucky!

A Gartner Research study found that approximately 7.5% of Americans lost money in financial fraud scams in 2008, many of them through online fraud. Between phishing attacks (luring users to fake Web sites), fake chat room sessions, and spyware, online consumers are vulnerable – as are online merchants and service providers.

At DAS Auto Shippers, we've identified a used car scam that's run by fraudsters using eBay to advertise used cars, trucks, and SUVs at sharply discounted prices. Buyers think they're getting a great deal: "Wow! A used Lexus SUV worth over $12k for just $4800? What a deal!" And that would be a great deal – if the seller actually had a vehicle for sale.

Here's how the scam works.

Buy It and We'll Have It Shipped

First, the scammer lists a car on eBay, Craigslist, Yahoo Motors or another sales/auction site. He provides what seems to be all the information a car buyer could possibly want: VIN, photos, mileage information, etc. The scammer has this information because he's copied it from a previous, legitimate online listing for a vehicle. It's probably a car that sold six months to a year before.

Even with all that information, most buyers are careful. They contact the "seller" and either want to see the vehicle themselves or have someone inspect it for them.

Of course, the person perpetrating the fraud doesn't have a vehicle to show, so he tells the buyer that Dependable Auto Shippers (DAS) or another auto shipper already has the vehicle crated for shipping. But, the fraudster adds, the buyer shouldn't worry because the vehicle is covered by the DAS (or another company's) Vehicle Protection Program. If the buyer doesn't like the vehicle when it arrives, he gets his money refunded.

Once the buyer agrees to the deal, the fraudulent seller explains that someone from the "Vehicle Protection Program" will contact them to arrange payment. The fake email, which contains payment information and a tracking number, directs the buyer to a bogus Web site that looks legitimate. We've had several scammers make complete copies of the DAS Web site and host them at different domain names.

Often, the buyer isn't aware he's been scammed until he contacts DAS to ask about delivery dates or request additional information. For the past several years, we've received about 3 calls per week like this; about 1/3 of the people calling have already paid.

Stopping the Scammers Isn't Easy

The scam is extremely difficult to prosecute. The perpetrators are smart enough to keep the vehicle cost below $5,000 because the FBI doesn't investigate and prosecute fraud schemes under that amount. Local law enforcement can't do anything because the fraudsters are usually located in Eastern Europe or Asia.

At DAS, we ask the would-be buyer to play along with the scam until the fraudulent seller sends the email with payment information. Then, our team goes to work tracing the IP addresses and tracking down the hosting companies to get the bogus Web sites shut down.

Unfortunately, the scammers just keep moving the sites around and defrauding consumers.

How to Recognize an Online Used Car Scam

Although each scammer uses a slightly different sales pitch, there are common warning signs. If the seller uses even one of these techniques, think very carefully before buying:

  1. The seller is a soldier deployed overseas or is working overseas. That's why he has to sell the vehicle quickly (and at a loss) and/or why it's crated up and not available for inspection.
  2. The vehicle costs less than $5,000 – but not much less. The scammers lure buyers with prices that are a fraction of the vehicle's book price. So they'll offer a $15,000 SUV for just $4900. Deals that seem "too good to be true" usually are.
  3. Send your payment to a third party. In an effort to appear legitimate, the seller tells you that the third party, whether eBay, DAS, or an escrow service, will immediately refund your money if you don't like the vehicle.
  4. You have to send payment by wire transfer. Scammers don't take payment by personal check, cashier's check, PayPal, credit card, or any other traceable method. Anyone requesting payment by anonymous wire transfer is probably engaged in some sort of fraud.

Dependable Auto Shippers is an eBay Motors preferred carrier. We work with all online sales and auction sites and other auto shipment companies to combat fraud schemes like this one. We never accept payment for anything but our services directly related to auto transport.

The best defense against this type of fraud is education. Consumers who are alert to signs of fraud can help get these scams shut down before the perpetrators are able to defraud a lot of people.

Author's Bio: Eric Weinkam

Eric Weinkam is the Chief Information Officer of Dependable Auto Shippers (DAS). DAS has been providing reliable auto transport services since 1954. Contact DAS for all your car shipping needs at http://www.dasautoshippers.com or call 866-298-4221

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