Buying and Selling Cars Online: Five Tips for Avoiding Internet Scams

The internet can be a wonderful tool for buying and selling automobiles. You can shop for thousands of new and pre-owned vehicles, 24 hours a day, from the comfort and convenience of your own home – even in your pajamas. Online marketplaces like AutoTrader, eBay, Cars.com and Craigslist connect buyers and sellers across the world, but not all of those buyers and sellers are honest. Thousands of people each year still fall victim to fraud when buying and selling vehicles online.

Advance Fee Fraud Scams

The most common scam that people encounter when selling a vehicle online is the “419 Nigerian Scam”, also known as the “Advance Fee Scam”. A prospective buyer emails you (often in very poor English) and says that he is interested in your vehicle and agrees to your selling price. He claims that he a previous deal fell through, and he has a cashier’s check in an amount that is several thousand dollars more than your selling price. He says that he will FedEx you the cashier’s check and asks that you wire the difference back to him via Western Union, once the funds have posted to your account. How trusting of him, right? Not so much.

Cashier's Checks are not like cash!

It is a common misconception that cashier’s checks are as good as cash, and that they clear the bank within 48 hours. In reality, your bank is required to make the funds available in your account within 48 hours. However, it may take up to two weeks for the check to actually clear. The counterfeit cashier’s check will eventually bounce, and then you are in real trouble. No only will you have lost the thousands of dollars that you wired to the scammer, but depositing or cashing a counterfeit check, even unknowingly, is a felony.

Beware of fake car ads

Sellers of automobiles are not the only ones at risk online. Scammers target eager buyers by posting popular vehicles for sale at enticing prices. The post looks perfectly legitimate, complete with pictures, VIN and even a free Carfax report. The seller claims that the vehicle is being stored in the warehouse of a transportation company that will ship the vehicle and handle all DMV paperwork. To appear even more genuine, the seller says that he will process the transaction through the “eBay Safe Trade”, or similar, department. No such department exists, nor does the vehicle! The pictures, VIN and Carfax report have been expertly fabricated or stolen from another seller’s post. Some scammers even create elaborate, professional websites to make you think that the transportation company, escrow company and “safe trade department” are real.

How to avoid falling victim to the scams

The online market places work hard to try to protect buyers and sellers from these scams, but there is only so much they (and the authorities) can do. Most of the scammers live in foreign countries (as evidenced by their abysmal English) and use “spoofed” email addresses. Even if the authorities could track them down, they are almost always outside US jurisdiction. So, it is up to you to protect yourself! Here are five tips to help you avoid falling victim to an internet automobile scam:

1. Never sell your vehicle to someone in a foreign country.

Think about it – they have cars in Nigeria and other countries, so why would someone want to buy yours and incur the shipping costs and import fees? Why would someone in the UK, where they drive on the left side of the road, want to buy an American car with the steering wheel on the wrong side?

2. Never trust someone who offers to pay you more than you are asking for your car.

If an honest person had a certified check for the wrong amount, he or she would simply return to the bank and get a new one.

3. Be wary of a buyer who insists on using an escrow service to “safeguard” the transaction.

Scammers often setup fake escrow services that claim an affiliation with AutoTrader, eBay, or eTRUST. None of these companies operates or partners with an escrow service.

4. Never ship your car to the buyer

or allow a seller to ship a car to you (unless the seller is a legitimate car dealership). The buyer and seller should arrange to meet and complete the transaction in person.

5. Secure payment for a vehicle before transferring the title to the buyer.

Insist on certified funds, and verify the check with the issuing bank before you release the vehicle. Buying or selling a vehicle online can be a fun and financially rewarding experience, but it is not without risk. Before you buy or sell, review the fraud awareness information provided by the various online marketplaces. And, above all, trust your instincts. If something feels hinky, it probably is.