If you’re in the market for a new or new-to-you car, you may be considering purchasing one online. If this is the case, you’re not alone. Auto shopping online has been gaining popularity in recent years and has become even more in demand during the COVID-19 pandemic.
While there are many legitimate opportunities to find vehicles online, the Better Business Bureau recently released a report highlighting an increase in online car buying scams, as well. To help you distinguish between a good deal and a fraudulent seller, we’ve compiled information about online car buying scams and how to avoid becoming a victim.
How Does an Online Car Buying Scam Work?
An online car buying scam operates similarly to an undelivered goods scam. In an undelivered goods scam, the scammer sets up an online store advertising a product or good (i.e. cleaning products or medical supplies). They take your credit card information as payment and never deliver the goods.
In an online car buying scam, the scammer advertises a vehicle for sale, often at a price that seems too good to be true. Once a potential buyer says they’d like to purchase the car, the scammer directs them to send the money, typically via a wire payment. After payment, the scammer says they’ll arrange to have the vehicle shipped or delivered to the buyer, but the buyer never receives the car.
According to the Better Business Bureau, it’s common for scammers in online car buying scams to have the payments sent to a third-party escrow company, claiming that this company will hold the funds until the buyer receives and accepts the car. However, in these fraudulent cases, scammers typically create their own fraudulent third-party escrow company for this purpose. This means that they receive the money as soon as it’s wired, and it’s very difficult to get it back.
Red Flags to Watch For
The best way to protect yourself from an online car buying scam is to know the red flags to watch for. We’ve listed some common red flags below.
- Low price – If the car is being sold for a price that is noticeably below market value, you should proceed with caution. As with all scams, if something seems too good to be true, it often is.
- Sense of urgency – If the seller puts pressure on you to decide or send money fast, it’s likely because they’re hoping to get your money before you realize the “deal” is a scam.
- Inability to see the car in person – Scammers often refuse to meet in person or allow you to see the car before buying. According to the Better Business Bureau, COVID-19 has made this type of scam even more successful because the scammers use the pandemic as a reason not to meet or show the car beforehand.
- Payment via wired funds – If a seller will only accept payment via wired funds, you should walk away from the deal. Wired payments are often impossible to recuperate, which is why scammers use them.
- Payment via gift cards – Scammers often ask for payment in the form of gift cards. They’ll have you buy gift cards in certain amounts and send photos of the gift card number and PIN. They can then use the gift cards right away without sending you what you’ve purchased. No legitimate car seller will request payment in this way.
- Mistakes in the ad – If there are typos in the car ad, or if the seller frequently sends communications full of errors, pause and investigate the seller before proceeding. This can often hint that the seller isn’t part of a legitimate business.
How to Shop for a Car Safely Online
While it can be disturbing to hear about online car buying scams, there are many legitimate ways to shop for a car online, but you must be committed to doing a bit more legwork than if you were buying in person. Follow these tips to get started on the path to a positive online vehicle purchase.
- Do your research – From local dealerships to national auto sales to private sellers, there are many opportunities to find a vehicle for sale online. Make sure you take the time to research reputable sellers and don’t be afraid to ask for recommendations from family members or friends you trust. Using a reputable seller or dealership will reduce your risk of becoming a victim of a scam or having a bad experience.
- Trust your gut – If something seems too good to be true, it probably is. If you feel uncomfortable with a seller, walk away from the deal.
- Stay organized – Document the offers and information you receive about each vehicle you seek out. Keeping yourself organized can prevent confusion about vehicles, prices, questions you’ve asked, etc. It will help raise a red flag if a seller tries to change their story or gives you conflicting information.
- Ask for a vehicle report – Any reputable dealership should be able to provide a vehicle report containing information about the vehicle’s history. This report will include whether the vehicle has been in an accident and the number of owners. Having this information can be valuable in determining what vehicle is right for you, especially if you’re considering very similar models. There are some items, like flood damage, that may impact other costs, like insurance rates. If a seller or dealership is unable to provide this detailed information, don’t be afraid to walk away from the deal.
- Know the return policy – Before making your purchase, review the return policy. Because you’re shopping online, you may be unable to test drive the vehicle or see it in person before buying. Determine if the dealership or seller has a return policy for vehicles purchased. The last thing you want is to be stuck with a vehicle that you’re unhappy with or doesn’t meet your expectations.
For more information on common scams and how to keep yourself safe, visit the security section of our blog.