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Avoiding Online Used Car Scams

Lyndon Bell
by Lyndon Bell
January 2, 2011

With the rise of online used car shopping and the anonymity it confers, many unscrupulous individuals are taking advantage of newfound 'opportunities.' Here are some scams we've become aware of and how you can protect yourself against them.

A recent news report recounts the tale of a man who went to see a used car he found online. Instead of driving away in his new car, he was carted away in an ambulance after enduring robbery and assault.

As if purchasing a used car isn't fraught with enough travail, you can now add online scammers to the list of things you need to watch out for. With the rise of online used car shopping and the anonymity it confers, many unscrupulous individuals are taking advantage of newfound 'opportunities.' Here are some scams we've become aware of and how you can protect yourself against them.

Cruising a used car sales site, you spot a car with an asking price that is thousands less than you know the car should sell for. You respond to the ad and learn the seller's either been transferred out of the country, is in the military, going through a divorce, or has some other 'reasonably plausible' reason they need to sell their exceptionally clean car fast and to make it happen, they're letting it go cheap.

If you pay attention though, you'll note they set it up so you never meet face-to-face, they try to make the deal happen as fast as possible, and they try to route payment through an escrow agency or some other 'trusted' third party. They tell you the car is all set to ship to you, all you need to do is post the money. The car will be delivered directly to you, and if you don't like it when you get it, you can even ship the car back to them. It's a car buyer's dream come true! You post the money to the 'escrow' account, the car never shows up, and when you try to go to get your money back the escrow service has vaporized. The dream was a nightmare in disguise.

When shopping for a car online, it's best to stick to used cars in your area so you can do everything fact-to-face. When a seller can't meet with you directly, it should raise a red flag. Never purchase a car you'”or someone you know and trust'”hasn't seen and had inspected by an independent mechanic. Anytime anybody asks you to post money to Western Union, or another payment service that is instant transfer, before you have clear title to the car, walk away. And finally, any deal that looks too good to be true'”usually is.

You find a great car listed online at a reasonable price offered by a private party, everything checks out, you buy it and when you look at the paperwork, you learn you bought the car from a dealer. Shady dealers will pull this one to get around complying with FTC laws governing the sale. Additionally, private sales aren't covered by the implied warranties of state law, saving them money and headaches, while cheating you out of any rights you may have had by purchasing from a dealer.

Run a vehicle history report, even if the seller presents you with one. When you discover a dealer posing as a private individual, report them to your state's trade commission.

As for avoiding becoming a robbery and/or an assault victim, never go to inspect a car with the money to buy it in your pocket. Nor should you go alone, whenever possible take someone with you. If you absolutely can't take someone with you, make sure someone reliable with a phone knows exactly where you're going. Call them when you arrive, and set two predetermined times at which you will phone them again. Instruct them to send the authorities to that location right away if you miss either call. Always arrive at least 20 minutes early so you can observe the surrounding area before you meet the seller. This will also give you an opportunity to observe anything the seller might be trying do to make the car more attractive as well.

If the car checks out and you decide to buy, do not pay in cash, and do not conduct the transaction out on the street. Have the seller meet you at your local DMV where there are lots of witnesses and security cameras, and you can transfer title right away. Present the seller with a cashier's check for the sales price'”after the DMV clerk informs you the title transfer is complete.

Bottom line, when it comes to financial transactions, there is no such thing as being too careful.


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