This content is provided courtesy of USAA.
Just as your good name may get stolen by identity thieves, reputable auto dealers may have their names and websites hijacked by hucksters. Other scammers put up fake websites and post the same car ad again and again, selling it over and over to unsuspecting buyers who’ll never see that set of wheels.
As director of the Better Business Bureau’s BBB Military Line®educating military families, Holly Petraeus sees many scams that target young military men and women. But, she says, these fraudsters use sophisticated techniques that put anyone buying a car online at risk.
“More and more of the scammers have become good at pretending to be an already legitimate website,” says Petraeus, who warns crooks are becoming especially skilled at targeting people buying used cars.
“There are some very good deals to be found using online car-buying services that take the hassle out of it for you, which can be reassuring,” Petraeus says. Yet she’s seen enough evidence of scam artists at work to develop a list of red flags to watch for when surfing for a good auto deal online.
- The vehicle is located out of state.
“That can mean they don’t want you to come and physically inspect the car because it doesn’t exist,” Petraeus says.
- The price is too good to be true.
Research what the price should be for that car, at that age and in that condition. If the price you’re being offered is thousands less, think twice. “Sometimes scammers will use the military, saying a car’s being sold by someone who’s deploying or pretending to be a parent selling for a deployed son,” Petraeus warns.
- The dealer makes you wire the money.
“They’ll have you wire it to an individual, not to the business itself,” Petraeus says. “If you do that, your chances of seeing the money again are pretty much gone.”
- The website offers free shipping or can ship immediately.
Anyone might jump at the chance to get his or her dream car for a great price in record time. But always investigate the shipping service and background of the seller if the shipping time frame or price seems too good to be true.
If you see these warning signs, call the dealer directly to learn how long it’s been in business and other details about its legitimacy. You also can call the BBB office in that area and ask for help researching the dealer and the offer, she says.
Complaints on the Rise
Though the Federal Trade Commission doesn’t keep statistics on online auto fraud in particular, it does report that auto-related complaints, classified under “auto/used” and “auto/others,” rose from 2007 to 2009. And the National Consumer League Fraud Center and the BBB continue to receive complaints about bogus online car sales.
In summer 2010, the BBB reported that one Memphis, Tenn., car dealer got more than 1,000 calls from buyers who thought they had been dealing online with the legitimate business. A fraudulent site had impersonated the Memphis dealer, using its name, address and contact information. The bogus site claimed to sell repossessed cars below market value and instructed buyers to wire a deposit to an individual instead of the business. Some buyers actually came to the Memphis lot to pick up cars they thought they had purchased.
In another example, Petraeus tells of one service member who thought he’d found a dream car for his son online. The online dealer promised to ship it to him right away. Suspicious, the father called the shipping company that the online business stated it had a standing relationship with. The company had never heard of that online dealer and had a several-month backlog on shipping. The seller likely would have taken the money and never shipped a car. In fact, that car probably never even existed.
Be Smart Online …
So, why do people fall for those too-amazing-to-be-true deals, even when the red flags are waving big and bright? “Sometimes people just want to believe in the pot of gold at the end of the rainbow,” Petraeus says. A military spouse for 36 years, she knows the worry and distraction that finances can cause the troops and offers these proactive ways to avoid online auto scams:
- Google the description of the advertised car. If you see it’s been sold 20 times, you know you’re dealing with crooks, says Petraeus, who explains scammers often lift the picture and description from a legitimate car ad and use it again and again.
- Insist on an inspection. “Tell them that you can pay someone to come and inspect the car,” Petraeus says. See if the online dealer balks.
- Get help from the local BBB. Sometimes the BBB will investigate the address of a business for you and make sure it exists. Or it already may have reports about a fraudulent company to share.
- Learn more about the company you’re dealing with by looking up the company on other websites. See if the contact information matches. Call the company directly.
- If you’re completely satisfied the deal is legitimate, choose a payment method that leaves a paper trail. “Absolutely never send a wire transfer,” Petraeus says. “You could offer to pay by a cashier’s check, but you have the best protection if you pay by credit card. If you’re getting a loan, arrange for your bank to pay the company directly.”
… and on the Car Lot
Even when you’re not dealing with scammers online, here’s how to make a wise purchase and negotiate a smart deal.
- Don’t divulge how much you want your monthly payments to be. “Some dealers will write you a loan to get you there, but you may be paying for five or six years and tacking on a huge amount of interest,” Petraeus says.
- Never say upfront you have a trade-in. Wait until you’ve settled on a price. “They’ll give you a big value on the trade-in and get the money back with the extra fees,” says Petraeus, who also advises that you research the value of your trade-in ahead of time.
- Go line by line over the contract. “Question everything,” says Petraeus. “If you’re not confident, get help. A legitimate dealer will let you take a contract for legal review.”
- Calculate the true cost of ownership. “Don’t forget about how much it’s going to cost for insurance, to keep gas in it and make repairs,” Petraeus warns. Before you sign on the dotted line, contact your insurer to find out how much insurance will cost.