An online advertisement offers free shipping on a used Jaguar. Another promises 100 percent of the vehicle manufacturer's suggested retail price on a trade-in. An online auto seller asks for payment via Western Union. These are three common tactics used by perpetrators in the burgeoning realm of online car scams, and in each instance, buyers can end up empty-handed and with emptied-out bank accounts.
Auto-auction fraud has bilked used-car buyers of nearly $5 million so far this year, and con artists have raked in $50 million in the past four years. "Car troubles -- including misrepresentations in ads, faulty repairs and scams involving used car sales -- are among the top complaints made to state and local consumer-protection agencies," reports Susan Tompor of USA Today
Here's how to avoid such scams.
1. Beware sellers who communicate only via email. Out-of-state sales can often be legitimate, but before you let go of any money, make sure to have a phone conversation to vet the sale. Also, a seller who refuses to meet in person or allow an inspection of the vehicle is not to be trusted.
2. Remember the adage "there's no such thing as a free lunch"? Apply it to free shipping offers. Shipping isn't cheap; depending on the vehicle, it can cost hundreds or thousands of dollars. A legitimate seller isn't likely to swallow that kind of money.
3. Be cautious of international sales and avoid wiring money to foreign bank accounts. If something goes awry, your recourse is far more complicated -- and depending on the country, limited.
4. If a price looks too good to be true, it probably is. And if a so-called buyer protection plan accompanies a screaming deal, it's probably a scam, too.
5. Requests for payment via Western Union or by transferring money to store-bought prepaid cards are major red flags. According to Tompor, "Consumer agencies say the cards are an easy way for scammers to get cash and not get caught."
6. Avoid sellers who begin a transaction on one site (Craigslist, for example), but later migrate it to another (such as eBay Motors). Also, if you've placed a bid on a used-car auction site and you receive an email that you were the top bidder, don't start celebrating right away. Go back to the original auction site and confirm the details first. Scammers can collect email addresses related to legitimate auctions.