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Common Scams to Avoid When Buying or Selling a Used Car

Car Sales Fraud: Warning Signs and Basic Precautions

Recently, the U.S. has been experiencing a resurgence of scams. According to the American Association of Retired Persons, fraud-related incidents accounted for more than $1.9 billion in losses in 2019. Because vehicles are such big purchases and their acquisition can be a very complicated process, car sales are a lucrative target for scammers. In fact, car sales scams are not exclusive to completely fraudulent entities, and can be carried out by legitimate businesses as well.
Identifying Scams Targeting Used And Junk Car Buyers

Used car buyers can be particularly at risk for certain types of scams related to auto sales. This is due to a variety of factors, including the less clear-cut value of used cars compared to new models.

Nowadays, many used car sales scams are conducted online. Online used-car scams will often offer a used vehicle that does not actually exist or that is not as valuable as the buyer was led to believe. Some warning signs that an online car sale may be a scam include:

  • The seller is pushy or insisting on a restrictive deadline.
  • The price is “too good to be true.”
  • They want you to pay with gift cards, through a wire transfer, or by a bank-to-bank transfer.
  • The seller makes excuses for why they can’t meet you or why you can’t see the vehicle in person before the purchase.
  • The seller says they acquired the vehicle in a divorce or through inheritance.
  • The seller says they are getting rid of the vehicle because they are moving.
  • The seller says the sale is guaranteed by eBay, Craigslist, PayPal, Facebook, or a similar online marketplace. These websites do not guarantee such transactions.

It is also important to note that scammers may use photos of a vehicle that matches the given description, or may pose as an existing business that deals in auto sales.

When buying a used car online, it is helpful to deal locally, make sure you have met the seller in person, and acquire identifying information about the vehicle, such as the license plate and the name of the person it is currently registered to.

Escrow Scams

An escrow service is a middleman that handles a transaction according to the contractual agreements made between the buyer and seller. Used car scammers may offer the use of a fake escrow service to put the buyer’s mind at ease. They will explain that the funds for the vehicle will be held by the escrow service until the buyer receives the car, but will then either cut and run or request additional funds as soon as the transfer to the “escrow service” is complete.

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