Have You Heard the One About…

Purchasing a used car has become increasingly attractive. New car prices have increased significantly in the 2020s, with only a few models priced under $20,000. Also, buying a used vehicle allows for more purchasing options than just going to a dealership.

There are many good reasons to consider buying a used car. Thinking there is a special car at a bargain price, though, can lead a person into a trap set by fraudsters.

Popularity of Private Party Sales

Sales in the U.S. for used vehicles typically range between 34 and 38 million units per year. Dealerships dominate used-car sales, but private-party sales between individuals are estimated to account for as much as 25% of that market.

The advantages of entering into a transaction with a private party might include a lower purchase price, no dealer fees, greater negotiating opportunities, and the chance to find a well-cared-for, “one-owner” vehicle.

There are disadvantages as well, given there is no warranty coverage or recourse if something on the vehicle breaks soon after purchase. There are even greater risks that most people do not consider with such transactions, specifically that a buyer could be scammed by a fraudster.

Fraudster activity related to private party transactions – such as those involving used vehicles – is often referred to as marketplace fraud. Simply put, these are scams where fraudsters deceive buyers (and sometimes sellers) for:

• financial gain through fake listings
• non-delivery of goods
• payment fraud
• phishing for data
• selling counterfeit items

A common example of this is trying to buy concert tickets, and finding – after sending the money through an instant payment channel – there are no tickets. And the seller/fraudster disappears. However, such schemes also occur with larger-value items, such as used cars.

Specific Types of Used Vehicle Scams

A car's condition can be verified before a sale is finalized. Services like CARFAX help a prospective buyer gain confidence by providing a history of a given vehicle, including accidents and damage, title problems, mileage, service history and the names of all previous owners.

Keep in mind that when dealing with a fraudster, there are greater threats than a faulty auto. Specifically, whether (A) the seller (i.e., the fraudster) has lawful ownership of the car in question, or (B) if there is even any car at all.

1. Car Not Owned

   The most common way fraudsters get physical possession of a vehicle they do not own is either to steal it or scam it from another unsuspecting individual (like “buying” it with a bad check). This process may include altering or forging the title and VIN. The innocent buyer becomes a victim when law enforcement tracks the vehicle down and/or the legitimate owner of the vehicle (dealership or another individual) takes legal action to regain possession. This leaves the buyer a victim of fraud, having lost the purchase money and likely the vehicle.

2. No Car at All
True online sales, where the entire transaction takes place virtually and a vehicle is shipped to the new owner, is a scenario rife for abuse by fraudsters. They commonly assume the identity of a legitimate owner and post pictures of their car online for sale. This can include creating an entirely unique ad listing or co-opting a real listing, with the fraudster putting their contact information in place of the real owner’s.

Another form of this type of scam is deposit theft. A prospective buyer may agree to make an advance deposit before being able to see the vehicle in person. The seller/fraudster is happy to take the deposit and never show up to the agreed meeting with the buyer.

These are the two most common types of used-vehicle scams, but there are more sinister and complex tactics that fraudsters can employ. Impersonating private individuals is a recurring practice, but at times, scammers will represent themselves as corporate fleet managers trying to unload a large collection of cars, or as a lawyer seeking to execute required “estate sale” vehicles.

Also, fraudsters usually post on legitimate online marketplace sites, but they have at times created fake websites or impersonated legitimate entities like eBay Motors, then attached fake payment portals. Further, they may try to direct buyers within their postings to a bogus vehicle history site or a fake VIN verification link.

Take Caution When Shopping Online

What measures can a buyer take if they are interested in a private-party sale for a used vehicle? That depends on the circumstances of the potential purchase, but law enforcement agencies and anti-fraud experts have noted the following:

• Never rely on photos or descriptions alone.
• Reverse-image search vehicle photos with a tool like “Google Lens” or “TinEye”.
• Ask for proof of possession via a real-time video call showing the seller, the car, the VIN and the plates.
• Use a service like CARFAX, CarGurus or Edmunds to verify details of the history of the car, including the most recent sales of the vehicle.
• Get photographic confirmation of the VIN and verify it with a provider of the National Motor Vehicle Title Information System, approved by the U.S. Department of Justice such as Auto Data Direct and VinAudit.
• Never use the payment, escrow, or shipping services suggested by the seller
• Pay nothing in advance, utilize a service to hold funds in escrow (like Escrow.com or KeySavvy) until the vehicle and title are delivered.
• If the seller purports to be a company, verify the phone number in the listing against the phone number provided on the company’s official website.
• Consult the National Insurance Crime Bureau’s free VINCheck for reports on stolen checks and unrecovered vehicles and insurance total‑loss records.
• Resist any effort on the part of the seller to have communications outside of the formal online platform where you first connected.
• Do not buy a car you cannot physically inspect.
• If a long-distance sale is necessary, engage a mechanic of your own choosing to physically inspect the vehicle.
• Compare the price offer against fair market prices, such as those listed in Kelley Blue Book.
• Propose making the physical exchange of the car at a local police station.

A car is a large-dollar purchase and is expected to provide multiple years of use. A little deliberate decision-making is worth the time invested. Remember, anyone who is in a rush to sell their vehicle – regardless of whatever plea they make – is likely not going to provide you that great vehicle for the bargain price that you were seeking.