8 Scams to Avoid When Buying a Car Online

The number of cars being bought online is increasing rapidly year after year. The global vehicle buying market was worth $304.7 billion in 2023 and is expected to grow at a CAGR of 12.58% to hit $885.1 billion by 2032.

However, as the number of legitimate online buyers and sellers increases, the number of fraudsters targeting this market is also growing. According to the National Insurance Crime Bureau (NICB), nearly 100 vehicle sellers on Craigslist lost their cars to fraudsters. So, how do you ensure you don't lose your hard-earned money to scammers when buying a vehicle online? Here are eight scams you should be aware of.

Odometer rollback scam

It is almost impossible to detect an odometer rollback unless you are a mechanic. This is because the people who do it are professionals, and that's why these scams are so prevalent. An odometer scam occurs when the seller rolls back the mileage to make a car appear less used and more valuable. You will, therefore, pay more than it is actually worth.

Since a regular person cannot detect this fraud, it's advisable to have a certified mechanic inspect the car before purchasing it. For instance, the vehicle should have the original tires if the odometer shows a mileage of below 20,000. If they are changed, that should already be a red flag. Ask for a vehicle history report to confirm.

Title washing

Title washing is when a seller alters the car's title to hide its history. This happens when they want to sell a vehicle with title brands for a much higher price than it's really worth. A car can get a title brand if it sustains severe damage or is unsafe to drive. This can happen for several reasons, such as;

• Salvage title - When a vehicle is declared a total loss by an insurance company. If it is rebuilt, it'll be branded rebuilt Salvage.
• Lemon title: This is a car with excessive mechanical problems. It has malfunctioned and been repaired multiple times while still under warranty.
• Water damage title - These cars have sustained significant water damage

The biggest challenge with title washing is that different states have different laws when registering titles. Scammers usually move the car to a state with looser title regulations and obtain a clean title to make the vehicle appear problem-free. Nonetheless, a keen buyer will spot the fraud by obtaining a vehicle history report from trusted sources. Carfax and AutoCheck can provide comprehensive reports.

Car cloning

Car cloning is when criminals illegally obtain number plates that match those of another legally registered vehicle of the same color, make, and model. They'll put the plates on a stolen or salvaged car and sell it to unsuspecting buyers. If you buy a cloned car and the authority catches up with you, you'll lose both the car and the money you paid and face criminal charges.

This is a very complicated fraud because they will also forge vehicle documents. Before buying any car, run its title information and VIN through the NMVTIS system to see if it has any issues.

Third-party scam

Some criminals will play with your psychology to scam you. They'll pretend to be wary of being scammed and request to use a third party to handle payments or shipping. For instance, they'll ask you to put the money in an escrow account before shipping the car.

Unfortunately, the "third parties" are often fake entities the scammer creates to siphon off your money. Once you deposit the money, you'll never hear from them or receive the car. Be careful when the seller introduces a third party you don't know. Only work with a well-known escrow and shipping company.

Fake listings

Fake listings are one of the most common forms of online car-buying fraud. Fraudsters create fake accounts and post pictures of non-existent vehicles. Most of the time, the images are very appealing as the cars will be nearly new.

However, the price will be much lower than the value to lure buyers. As a result, many buyers will be interested. Once you show interest, the scammer will ask for a deposit or full payment upfront, promising to ship the car. After you pay, the scammer disappears, and the vehicle never arrives.

Wire transfer fraud

Wire transfer fraud is a common tactic scammers use because wire transfers are difficult to trace and reverse. They'll advertise a car at a good deal, and once you show interest, they will convince you to wire money for the car purchase using fake names and addresses. Once the money is sent, it's almost impossible to get it back, and you never hear from them again.

Phishing scams

Apart from stealing your money, scammers may also target to steal your personal information. As usual, they'll post fake ads and wait for unsuspecting buyers to show interest. They might send you an email or message pretending to be from a legitimate car dealership or website. These messages often contain links to fake websites that look real. Once you enter your personal information, such as your bank details or social security number, the scammers can use it for identity theft.

Curbstoning

Curbstoning occurs when unlicensed dealers pose as private sellers to avoid regulations. These sellers often sell stolen, salvaged, or cars with tampered odometer. Since they are not legitimate dealers, they don't provide warranties or proper documentation. They'll sell at a lower price to attract buyers and prefer a cash transaction. Don't be surprised if the police come knocking after buying such a car. The car is probably stolen. The only way to avoid such scams is to buy only from legitimate sellers.

Red flags to look for when buying a vehicle online

Most people are honest when presenting a vehicle for sale, but some are not. Here's what you should look out for when buying a vehicle online.

Unbelievably low prices

If a deal seems too good to be true, it probably is. Scammers understand that humans are attracted to discounts, so they'll use low prices to attract buyers quickly. Before contacting the seller, compare the cost of the car with similar models on different websites to gauge its market value.

Urgency and pressure tactics

Scammers usually create a sense of urgency by telling you that there are many other interested buyers or that the offer is only available for a short time. This pressure can push you into making hasty decisions without proper due diligence. And that's how you lose money.

Lack of verifiable information

A legitimate seller should provide detailed information about the car, including its history report, VIN, and service records. If the seller is reluctant to share this information or provides vague details, it's a red flag.

Suspicious payment methods

Be wary if a seller insists on using unconventional payment methods like wire transfers or gift cards. Scammers often use these methods because they are hard to trace and recover.

How to protect yourself from scams when buying a vehicle online

Here are a few tips to help you navigate the online car-buying process safely and securely.

• Research the seller thoroughly by checking their reviews, ratings, and other available background information. If you're dealing with a private seller, ask for their identification and proof of ownership.
• Obtain a vehicle history report using the car's VIN. You can get a comprehensive report from Carfax or AutoCheck.
• Use secure payment methods like credit cards or legit escrow services.
• Inspect the vehicle in person or hire a third party to inspect it before making any payments.

Summing Up

Buying a car online can be easy and convenient. However, you need to be careful not to fall victim to the above scams. If you do, report it to the relevant authorities immediately. This includes the Federal Trade Commission (FTC), local law enforcement, and the Internet Crime Complaint Center (IC3).