Auto Scams and Fraud: A Safety Guide for Buyers and Sellers

Selling a car privately is generally safe, but cars are valuable commodities and there are unscrupulous people out there who are ready to take advantage of anyone without a cool head. There are a number of precautions you can take to avoid being the victim of a car scam, but the most important thing is to be aware of the type of criminal practices that may be going on.

Scams and fraud on used car sellers and buyers are fortunately very rare in the UK, but even then you should still take steps to ensure you are protected. When selling privately, always use a reputable classifieds provider and only use secure payment methods. Alternatively, you can bypass the private sale route altogether by using an online car buying service, using the car as a parts exchange, or selling at auction.

When buying a car. It’s safest to use franchise dealerships or reputable independent retailers, but if a car in a private sale catches your eye, just be aware of the pitfalls and do some simple checks to protect yourself. Read on for our top tips to protect you and your money.

Used car scams to watch out for when selling online

Car matching scams

If you advertise a car for sale, you may be contacted by someone offering to put you in touch with “guaranteed” or “final” buyers. They will promise you that they already have a queue of customers looking to buy the make and model of car you are selling. They will then ask you for a ‘matching fee’ up front (usually around £80-100) before introducing you to their buyers.

However, there is often no buyer and the car connection fee payment cannot be reversed, which means your money is wasted. The Office of Fair Trading (OFT) estimates that car sellers lose almost £3 million a year in this way.

Advice

Beware of anyone cold calling you about a car and asking for money up front. Certainly don’t give them your credit card details, though the promise of a series of buyers willing to pay the asking price for your car immediately (often without even seeing it in person) seems plausible. As the old saying goes, if it sounds too good to be true, then it probably is.

The mystery shopper scam

A popular scam is for a fraudster to call and pretend to be a foreign-based buyer who wants to buy your car. These callers will then reveal that they have a shipping company lined up ready to pick up your car and want to pay you via an online payment service.

From there, this mystery shopper scam can take many forms. For example, they can transfer money for the car to your account using a stolen credit card or a fake online payment account. Shortly after, they will contact you to tell you that they accidentally overpaid and ask you to refund the difference. Once you do, they can then withdraw the original amount from your account, leaving you out of pocket.

The other variant is more damaging. The fraudster will pay for the car using a money transfer service and have it collected. After taking the vehicle, they will then initiate a dispute process, using the money transfer service’s buyer protection policies to claim that they never received the car and demand a refund. In some cases, they can be successful.

Advice

Money transfer services such as PayPal and Western Union Bank advise you never to transfer money to someone you don’t know who is claiming an “overpayment”. They also avoid engaging in large transfer transactions with people you don’t know completely.

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Beware if a buyer claims to work overseas or says they are based overseas. Probably the safest way to accept payment for a car is through a bank transfer. If a buyer suggests using a company that holds the payment before releasing it to the seller (known as an ESCROW account), check that the institution is legitimate and that they are using the Payment Services Companies Registry of the FSA (Financial Services Authority).

Used car scams to watch out for when buying online

There are various scams and frauds that target online car buyers. We explore some of the most common below, but as a starting point we’ll refer to our original rule of thumb: if something sounds too good to be true, it probably is.

Clocking and fake mileage scams

As you are no doubt aware, the term ‘clocking’ refers to the practice of adjusting a car’s odometer so that it shows less mileage than has actually been driven. The appearance of digital odometers on cars means this dubious practice isn’t as common as it used to be, but that doesn’t mean it’s been eliminated.

Although the later clusters of instruments are more difficult to handle, it can be done with the right tools. And with so many cars now being purchased under finance contracts with strict mileage limits, the motivation to artificially reduce mileage is greater than ever. There are even companies that openly offer ‘mileage correction’ services online, and it’s been estimated that up to 2.5 million vehicles in the UK currently have incorrect mileages. The truth is, it’s not actually illegal to “sync” a car, it’s just illegal to sell a car without “declaring its actual mileage”.

Advice

The best way to spot a timed car is to do your research. Check the MoT history, which can be easily done online and will show the mileage recorded on each test – if there are any discrepancies alarm bells should ring. Alternatively, purchase an HPI check which will include this information and also verify any current financing on the vehicle, among other things. When looking at a car, carefully check the service history to make sure the recorded mileage matches, and look for signs of wear that could indicate the car has been used more than the listed mileage suggests.

Virtual car scams

These scams involve false advertisements for vehicles, usually at attractive prices, that do not actually exist. Unwitting buyers who respond to these ads are told that the car is outside the UK and are sent to a fake website for a shipping company that claims to handle the money transfer and shipment of the car. The fake company offers to send the funds to the seller when he picks up the car to deliver it to you, but the non-existent car never arrives with the buyer.

Advice

Any car advertised at well below market value should immediately raise alarm bells – doubly so if the vehicle turns out not to be located in the UK. Buying a car you’ve never seen from someone you don’t know who is based overseas is risky business. If you choose to continue, do so with extreme caution, if at all. As we mentioned earlier, all major money transfer organizations advise against using their services to transfer money to people you don’t know.


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Susan W. Lloyd