Vehicle Purchasing Scams

Last Updated on April 30, 2024

Photo by Matthias Münning

Buying a car is a big investmentI know. As soon as I finish writing this article, I’m heading out to purchase a new one. So this discussion feels exceptionally relevant. 

I can’t imagine being scammed while purchasing my new vehicle, but it happens. The BBB went as far as to issue a consumer warning in 2021 about buying a car online. And the FTC has issued numerous consumer alerts on car-buying scams in general. 

There are several scams that fraudsters can pull when you purchase a car in person – including things like vehicle history reporting scams and odometer rollbacks. If you’re purchasing a car online, the list of vehicle purchasing scams gets longer

Selling a car is fraught with potential risk too. If you need to sell your used vehicle, understand that scammers can rip you off relatively easily. Unless you’re being careful, it can be a dicey business. 

Unfortunately, falling for a scam can cost you big time. Whether you end up losing money, end up driving home a faulty vehicle (perhaps even a stolen one), or become a victim of identity theft, the consequences can be dire. 

Luckily, you can rest a little easier by understanding prevalent vehicle purchasing scams and following a few best practices while car shopping. 

So, let’s zoom in on the most popular vehicle purchasing scams.

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Common Car Buying Scams

We’ll start with scams that criminals pull on car buyers. Some are reserved for online purchases, but others can occur when you buy a used car in person. 

Title Washing

Car titles carry information on the vehicle’s history, including whether its been in a flood, declared totaled, or has any other major negative issues. Title washing can be used to eliminate evidence of events like this. It can also remove evidence of a lien or evidence that the car is stolen

Unfortunately, unscrupulous thieves can change the car title by physically altering it or illegally moving it across state lines. Different states recognize different title brands, so if a criminal moves the car to a state where certain brands aren’t recognized, they can obtain a clean title. 

This is an obvious problem for buyers because you could easily miss reliability and safety issues. Floods and other catastrophes can damage a car, even though you can’t visually see issues. 

You’re likely to overpay for the vehicle with title washing. And, in a worst-case scenario, you could end up driving a stolen car

How To Avoid: 

Obtain a vehicle history report when buying a car online or from a seller you don’t know. This should show you any negative events on the car’s title, and reputable sellers typically provide them before you need to ask. 

Also, consider calling your auto insurance company. Give them the VIN of the car you’re considering. They could have a record of the car being in an accident or flood, among other things. 

Curbstoning

Businesses that sell or buy vehicles must have a valid dealer license. This license helps ensure the business abides by regulations like lemon laws to protect car buyers from scams. 

These laws sometimes mean the business gets a defective vehicle that can’t legally sell (to anything but a scrapyard, anyway).

Dishonest dealers might try and sell it anyway. Rather than risk their dealer license, these shady characters are more likely to pose as private sellers. 

They’ll offer to meet you in a parking lot or front of a private residence –at the curb (thus where the scam got its name). And, typically they’ll ask for a cash payment

How To Avoid: 

If you purchase a vehicle from a private seller, ask for basic information in advance. First, verify that the seller holds the car’s title. If the car isn’t in the seller’s name, they could be trying to ensure there’s no paper trail that law enforcement could trace back to them. 

Also, ask for a car history report. If the car has title issues, it should show up there.

Fake Ads

If you’re buying a car online, beware of false advertisements. Criminals can post advertisements full of pictures and vehicle details for a car that they don’t own

If you respond to one, they’ll likely ask for payment before you see the car in person. 

If you send it, they’ll take the money and run. 

How To Avoid: 

Ask for details from the seller before you purchase a vehicle online. These details should include the VIN and car history report

If those check out, ask to meet the seller in person to inspect the vehicle. If the seller gets weasely about this request, beware. Never buy from a seller who doesn’t want you to see the car before you send payment. 

Wire Transfer Requests

Wire transfers are convenient ways to send large sums of money, which you typically need to do when buying a car, but they’re also inherently dangerous

As a banker said to me once, “Once you send a wire, you cannot get it back. It doesn’t matter who your bank is or how quickly you act. The money is gone.” 

So, it’s unsurprising that criminal car sellers often ask for wire transfers when selling defective or non-existent vehicles. 

How To Avoid: 

Never wire funds when purchasing a car. If a seller asks you to send money via wire, politely decline and ask for an alternative method. If they refuse to provide a different way to pay, you should walk away from the sale. 

VIN Cloning

A car’s VIN, or vehicle identification number, is how you register your vehicle, track recalls, and record the vehicle’s history. Criminal dealers can physically etch over the VIN (located on the top of the car’s dashboard) to sell a stolen vehicle

They may use another car’s VIN that matches the make and model, making this scam more difficult to spot. 

How To Avoid: 

Luckily the VIN isn’t only located on the car’s dashboard. It’s also on the inside of the driver’s door. Make sure the two match when you inspect the car before purchase. Also, ensure the VIN on the car matches the vehicle’s title

Odometer Rollbacks 

Odometers aren’t analog anymore, which makes rolling them back a bit trickier, but it still happens

To ensure this isn’t the case with a used vehicle, you need a mechanic to check for signs of tampering. 

It could be difficult to bring a mechanic along when buying a car. Thankfully, you can do a couple of other things to protect yourself from this scam. 

How To Avoid: 

Start by requesting the car’s title. It will show the car’s mileage when the title was created or last transferred. 
You can also request the vehicle history report. That report won’t always show mileage, but it does in certain situations. For example, if the car was in a collision, it might list the mileage at the time of the accident. 

If the car’s mileage is lower than it shows in the title or at any point in the vehicle history, you’re being scammed.

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Prevalent Car Selling Scams 

Selling your car online or in person isn’t without risk. Here are a few common scams to watch out for. 

Fake Escrows

If a potential buyer offers to place funds in an escrow service to hold funds, it’s not necessarily a scam, but it could be. 

Many legitimate car purchases rely on escrow services, but a fraudulent buyer can create a fake escrow company. It will look like the funds are waiting for you, but they’ll disappear when you transfer the title

How To Avoid: 

As the seller, you should choose the escrow service if you need one. And unless you’re shipping the car to the buyer, an escrow service probably isn’t necessary, so beware of buyers that recommend one otherwise.

Cashier’s Checks

It’s easy to believe that cashier’s checks are safe, but that’s not always true. Fraudulent check scams are all too prevalent, and it’s not unheard of for a criminal to create a fake cashier’s check. 

These checks will look very real, and you won’t be able to tell it’s fake just by looking at it. If you go to deposit it, the bank may even accept it initially. And, in all likelihood, you’ll have handed over the car title before the check would normally clear.

How To Avoid: 

If you’re going to accept a check from the buyer, call the financial institution on the spot. Verify that the check is legitimate.

Payment Plans 

Many fraudulent buyers push for payment plans when purchasing cars from private sellers. Often, they’ll make an initial deposit and may even make the first couple of payments, but then, they disappear – with your car

How To Avoid: 

Never agree to a payment plan. Getting a stolen car back is rare. Most of the time, it’s gone for good. 

Identity Theft

Sometimes the criminal’s aim isn’t to steal your car – it’s to steal your identity. With this in mind, a scammer may ask for things that seem legitimate – like a picture of the car’s title or who you bank with (so they can “wire” the funds). 

They use this tactic to gather your personal information, which, more often than not, they’ll sell on the dark web to hackers and other thieves who will take things a step further. 

Days, weeks, or months later, you might find your credit score is lower than it should be, or worse, your bank account, social security account, or 401(k) is suddenly empty. 

How To Avoid: 

The best way to avoid identity theft is not to give personal information to strangers. If a potential buyer asks for a picture of the title, block out all personal information before you send it.

Even following those best practices, though, some of your personal information may get into the wrong hands during a big transaction (like selling a car) – especially if you’re doing it online. That’s why having an identity protection service is a good idea. 

These services will look for your information on the dark web and monitor your credit reports. So, if your information gets into the wrong hands, you can take steps to prevent further damage, like locking your credit or changing your banking passwords. 

Though there are many identity protection services available, I recommend Aura. It offers the best monitoring coverage. It also comes with all sorts of online security features that might be helpful if you’re planning to sell or purchase a car online. 

Best Practices For Buying or Selling a Used Car

Whether you’re buying or selling, if it involves private parties, the internet, or even a smaller dealership, here are some things you should always do

When Buying a Car: 

Ask for a vehicle inspection. 
Understand that most online marketplaces never guarantee sales. 
Check for any liens on the vehicle. 
Obtain a full vehicle history

When Selling a Car: 

Always meet in person if possible. 
Only accept cash – avoid checks (even Cashier’s checks)
Consider using an escrow service (of your choosing, not the buyer’s). 

What To Do If You Become A Scam Victim

You could become a fraud victim even if you know how to prevent prevalent vehicle purchasing scams. Scammers are smart and regularly come up with new ways to trick people. 

While I hope it never happens to you, here’s what to do if it does.

1. Report the Fraud 

First, you should report the fraud. Whether the thief got away with your car or your cash, you should file a police report. While it’s unlikely that the police will be able to recover your vehicle or your money, this report serves as official documentation, which you might need later on. 
The police aren’t the only people you need to report the crime to. You’ll also want to report the fraud to the FTC.
You’ll need to report the scam to the FBI’s Internet Crime Complaint Center if the scam occurred online. 
Finally, if any of your banking information was exposed during the fraudulent transaction, you must contact your financial institutions and let them know.

2. Monitor Your Credit and Bank Account Closely

You should probably be doing this anyway, but you’ll want to be extra vigilant if a criminal has your information. 

Many banks allow you to receive a daily transaction summary, and you can request your credit report from the three major credit bureaus (TransUnion, Equifax, and Experian). 

Review this information to ensure there are no signs of fraud. 

You should also review your retirement accounts and social security accountsespecially if there’s any possibility that the thief obtained your social security number. 

If you notice fraudulent activity, alert your financial institution immediately, freeze your credit, and file a police report as needed.

3. Consider Investing In Identity Theft Protection 

While it’s ideal to have an identity theft protection service monitoring your information before you become a victim of a vehicle purchasing scam…better late than never

With an identity theft protection service watching out for you, it’s unlikely that a thief will get very far with your personal information. If they do, you’ll have protection. 

Identity theft services typically offer theft insurance coverage. Typically, it will protect you from stolen funds, identity restoration expenses, and legal fees. 

Most services offer $1 million in coverage, regardless of the number of people on your plan – but identity theft can become very expensive. So, this is another reason I recommend Aura.

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Conclusion 

Vehicle purchasing scams are shockingly prevalent, especially when the purchase relies on the Internet. 

If you plan to buy or sell a car online, you must be exceptionally careful. Even in person, if you’re buying from a smaller dealership or participating in a private sale, you must watch out.

Awareness of popular scam techniques will help, but scammers will ultimately find new ways to cheat you out of your money and assets. That’s why the best thing to do is invest in protection such as Aura. With it,  you can rest a little easier, even when considering a used car purchase.

Other Types of Scams You Need To Know: