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Thinking of buying a car online? May want to read this first

29 May 2011

This is yet another tale of caveat emptor: buyer beware. Buying cars online, like purchasing so many other items over the Internet, has exploded in popularity by virtue of its ease and availability. The convenience of shopping online makes for an attractive shopping venue. But be warned, it makes for an attractive fertile ground for thieves as well!

“Joan” (a pseudonym) thought she’d won an online auction for a 2001 Chrysler Town & Country minivan. She had bid $6000 in what turned out to be a legitimate auction for the vehicle, and was ecstatic when notified she had been the highest bidder. Had she examined the auction site with a more discerning eye, however, she would have noticed that, curiously, she was not listed as the highest bidder—someone else was.  

Imagine her chagrin when her family found out three weeks later that the $6000 they’d put in an “escrow account” toward the purchase of the vehicle had vanished, along with any hopes of receiving the prized vehicle, or any vehicle for that matter.

Here’s how this scam goes down: con artists regularly troll sites such as the aforementioned online car auction which appeared on the legitimate–and presumably trustworthy–website Yahoo. The thieves use legitimate sites such as Yahoo to retrieve that all-powerful indentifying information to perpetuate their thievery on unsuspecting victims. The cons in this case got Joan’s email address from the site, and contacted her, purporting to be the vehicle’s seller and congratulating her on her supposed winningest bid. To further complicate matters, the Yahoo online auction was actually a real auction; the only thing fake was the phone call of congratulations and the immediate request for payment (the vehicle’s true owner had no idea of the fraud being perpetuated in his midst).

Many of these scams work out of former communist or African countries such as Nigeria, the infamous home of the “Nigerian fraud” scam of which most of us are familiar. Many people in these countries are facing tough times, and rationalize their scams by stating it’s not the scams themselves that are immoral, but the ostensible American greed that’s the real culprit.

For every time we have been warned “if something sounds too good to be true, it probably is,” there is a con-artist replying with the expression: “You can’t fleece an honest man.”

In Joan’s case, however, it wasn’t prosperity or even greed on her part. She was actually buying the van as a favor for her elderly parents. She’d encouraged them to take out financing for the vehicle and, believing they’d lucked upon a legitimate bargain, sent the money to an ostensibly secure online escrow account. Because this technique is common in legitimate car-buying to act as an impartial middleman–an agency holds the money securely until the vehicle is shipped to its new owner–no immediate red flags were raised. This particular escrow site that Joan was directed to, however, was in reality a bank account controlled by the cons. As soon as the funds hit the account–POOF–the money was withdrawn and the account vanished, along with any sort of paper trail.

According to the Pew Internet Project, a whopping 78 percent of Americans find online shopping convenient, and 66 percent have purchased something online at least once. This makes for a vast target audience for thieves.

Shopping online is convenient, and it generally is safe. Just make sure to follow precautionary measures and your common sense. Use the “smell test” when evaluating whether to send money or credit card information over the Internet. Never, under any circumstances, give your exact birthdate or social security number out. Use a credit card as opposed to a debit card—in the case of debit, the money is gone almost immediately with little hope of recovery in the event of fraud; in the case of a credit card, you may be able to dispute the charges later on down the road should that become necessary.

If you feel you have been a victim of Internet fraud such as on online car scam, or if you have a hinky feeling about a particular site, you can report that to the Internet Crime Complaint Center, a collaborative online complaint repository between the FBI and the National White Collar Crime Center.

Additionally, check out companies with your local Better Business Bureau Know that fake online sites will often display an imitation BBB badge—check with the Bureau itself to ensure that company or site is actually a member. Not only that, fake sites have been known to use VeriSign Secure and even Internet Fraud Complaint Center imitation badges as well. Always double check with the entity itself!

Most online vendors, such as eBay Motorshave information and warnings about particular scams, plus general car-buying scheme details as well. Do your homework. The cost of a vehicle is a large investment, and while most online car-buying sites are legitimate, that high dollar value is an irresistible temptation to those who would have something for nothing.

Finally, legitimate escrow companies won’t use person-to-person money transfers like Western Union or MoneyGram, nor will they have you send payment to an individual. And steer clear of “escrow” company websites with domain names ending in .org, .biz, .cc, .info or .US.  In California, for example, the Department of Corporations licenses just ONE online escrow site– www.escrow.com. Check with your state for similar policies.

My father used to always tell me, “Everyone listens to the same radio station: W-I-I-F-M. Or, what’s-in-it-for-me.” Think about this the next time something seems too good to be true.

Sources and Resources: 

FBI’s list of common fraud schemes

Pew Internet Project

Online escrow fraud Q & A

10 tips to avoid online escrow fraud 

Consumer watchdog warns of online car scams 

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Sami K. Hartsfield, ACP is a freelance writer and plaintiff’s litigation paralegal in Houston. She holds a degree in paralegal studies with a 4.0 GPA and a bachelor of science degree in political science, graduating summa cum laude. Sami interned with Texas’ 14th Court of Appeals under Chief Justice Adele Hedges, and completed the University of Houston Law Center’s Summer 2008 Prelaw Institute. She is preparing to enter law school in the fall and holds a national advanced paralegal certification as well as six specialty certifications: Discovery; Trial Practice; Contracts Management; Individual & Entity Medical Liability; and Social Security Disability Law. You can find her on Facebook, and e-mail her with questions, comments, or ideas at LegallyBlog@yahoo.com.

Sami Hartsfield

  

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 Copyright 2011 Sami K. Hartsfield – All Rights Reserved

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