Show me the car fraud: Tips to protect yourself from scams in online auto malls

woman bending over car engine calling for helpI did a good deed this week. I caught a shyster trying to sell a car that likely didn't exist and in the process learned a few things about how to protect yourself when buying a car online.

It's been a while since I last bought a car. Back then, the idea of completing the entire process online from search to sale was still pretty far out. Now of course, it's not. Gone are the days when all you had to worry about was a single slippery salesman in an auto showroom. Online car sales have brought their own special set of hucksters and charlatans, just aiming to drive away with your hard-earned cash.

I met one last week.

Being in the market for an SUV, I went window shopping on Cars.com. I saw a listing for a 2010 BMW X5 xDrive48i priced at around the Kelley Blue Book trade-in value. It was located nearby – within 33 miles. It even had a clear CARFAX report.

The following weekend I returned to Cars.com and noted the identical SUV was still for sale – but this time, it read as a 2009 model. Hmm, I thought. The last time I looked, I could've sworn it was a 2010. Oh well, maybe it was just a listing error that had been corrected.

Convinced that this was a good car for me, I wrote to the seller using the Cars.com online contact form. I asked two specific questions about the car, one of which was its location. I expressed an interest in taking a look, maybe a test drive.

The seller's reply came quickly, but was written in stilted English. Since his name appeared foreign ("Johan Galtung") however, I was willing to forgive his iffy language skills. Heck, maybe he wasn't a native speaker. But his response was generic and failed to address my specific questions. He also made it clear he was looking for a cash sale.

Something about the whole thing didn't sit right with me, so I used the "report a scam" link on Cars.com to report details about the exchange. I was right. Within just seven hours, Cars.com investigated and responded, confirming that the ad was, in fact, fraudulent and had been immediately removed.

It turns out that Cars.com has invested millions of dollars in fraud-fighting tools and staff. Renee Porter, Director of Classifieds and Partnerships for Cars.com, said, "We take fraud so seriously here because we don't want the consumer to have a bad experience. We consider ourselves the cleanest, safest place for consumers to shop and sell their cars." Cars.com scans IP and e-mail addresses of advertisers and human staff monitor ads that come in.

When browsing an online auto mall, you'll find plenty of good deals by honest folks; but it's an unfortunate reality that scam artists are mingling among them, and their ads often appear legitimate on the surface. To protect yourself from falling victim to an online scammer, you need to be vigilant and know how to recognize potential red flags.

Some clever crooks make a concerted effort to craft "real-looking" ads. One way they do this is to provide a CARFAX "Vehicle History Report" with an online listing. CARFAX Vehicle History Reports contain information that can impact a consumer's decision about a used vehicle. CARFAX reports may include the number of owners, state emissions inspection results, odometer readings, title information and more. CARFAX gets its data from more than 34,000 sources, including (but not limited to) every U.S. and Canadian provincial motor vehicle agency, plus many auto auctions, fire and police department, collision repair facilities, and rental agencies.

CARFAX partners with Cars.com and other online auto malls, allowing sellers the option of providing a CARFAX report as part of their listing.

Used car listings with CARFAX reports may, at first glance, appear to be safer bets than those without. A CARFAX report might suggest to a buyer that the related listing is legitimate.

Not so.

CARFAX reports are VIN-specific. That means the information in them is collected based on a vehicle's VIN (Vehicle Identification Number). One scam known as "VIN Cloning" involves scammers stealing VINs off of legally registered autos, then using them to mask the identities of stolen vehicles – usually high-end vehicles like that BMW I was eying. Crooks look for a car that matches the make and model of the stolen vehicle they want to sell. Then, they steal the VIN number and use it to "rename" their stolen car.

Sometimes, there isn't even a real car for sale. A scam artist may want you to wire money for a vehicle, but he has no intention of delivering a car. The ad is just a ploy to separate you from your money.

Keep in mind, too, that while a CARFAX report will tell you about the condition of a car, it's a report on the vehicle – not the seller.

So a clean CARFAX report may not represent the actual car for sale, or even guarantee that there is a car for sale.

Chris Basso, media relations manager of CARFAX, points out that, "As the buyer, you have the power to check things out before you turn over your hard-earned money. Get the information (about a vehicle's history), then take it and ask questions. Make sure the information you're getting on the CARFAX report matches what the seller is telling you."

Here are some things to look for in a CARFAX report that may indicate a fraudulent ad:

Different States. For example, the car is in Utah, but it was last registered in Texas. This could point to a scam. Some scammers might know you're looking for this detail, however, and to circumvent your suspicions, they may indicate that the car is being sold by a leasing company. They figure you might say to yourself, "Hey, that makes sense – a rental car could have traveled between states easily." Maybe not.

Non-Sequential Odometer Readings.
Odometer roll-backs are an established form of fraud in used car sales. Sellers artificially inflate the value of a vehicle by manually decreasing the mileage read-out on the odometer. CARFAX gathers information from various sources to put mileage readings on its reports. If you see mileage numbers from different dates that are out of sequence, this could indicate an odometer roll-back.

Turn-Over. Chris Basso of CARFAX encouraged us to question, "Would a person turn over a car that's one or two years old, twice within two years? It's unlikely." Look for high turn-over within a short period of time. This could be indicative of fraud.

Besides taking a close look at a vehicle's CARFAX report, also keep your eyes peeled for signs of fraud in the auto listing itself. Renee Porter at Cars.com advises consumers to look for these clues:

Different Listings. If you see multiple listings for the same vehicle, but reflecting small differences (like the year of manufacture, in my case), you're right to be suspicious.

Too Big a Bargain. Says Porter, "If it's too good to be true, it probably is. Or if you have a gut feeling, you should definitely listen to that."

Urgency. The crook who listed that BMW gave me an unsolicited story about getting engaged, buying a house and changing jobs. "Too many life changing events have taken place and are forcing me to sell this awesome vehicle," he wrote. That jibes with something I learned from Porter, who said, "Sometimes a seller might describe a life-changing event, like going through a divorce, a job change, moving out of state, to explain why he needs to get rid of the car quickly. Most legitimate sellers will stick to the facts of the vehicle."

Downpayment via Money Transfer. In its online Fraud Awareness Tips, Cars.com advises you to "exercise extreme caution before wiring deposits or payments using Western Union or MoneyGram, especially to foreign countries. Sending money in any form overseas will likely result in losing all of it. Western Union and MoneyGram are very popular for Internet scams because the funds are available instantly, untraceably and worldwide."

You might be discouraged by the fraudsters, but don't let them ruin a potentially great experience for you. The key is staying aware. And while it may seem there's a new scam popping up every day, take heart. Cars.com is pitching in to keep consumers informed. Says Porter, "Whenever we do hear of a new fraud tactic, we post it to our SAFE blog."

The internet doesn't have to be a scary place for car shoppers. It offers convenience and more options than we ever had before, and the potential to shop for the best all-around deal. You just have to be smart.

Tom Kraeutler delivers consumer protection advice and more each week as host of The Money Pit, a nationally-syndicated home improvement radio program. He is also AOL's Home Improvement Editor and author of "My Home, My Money Pit: Your Guide to Every Home Improvement Adventure."

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