Don't get run over by online car scams
Jacob Johnson, manager of America Auto Sales, says scammers used his dealership’s identity to commit wire fraud and steal from unsuspecting car buyers online. Photo by Lance Murphey
As Internet car sales increase in popularity, so does the fraud. The FBI warns that car scammers will work a number of angles to get consumers' money, all without delivering a car — from posing as military personnel preparing for duty to assuming the identity of reputable auto dealerships.
One of the latest schemes to surface offers online shoppers incredible deals on repossessed cars from an apparently credible source. The supposed sellers create a website using the contact information of a real auto dealer, at the same time creating a third-party verification site to assure buyers the sale is legit. The fraudulent website instructs buyers to wire a 50 percent deposit to an individual rather than the company, claiming this enables them to legally skirt tax laws. The balance is due upon delivery of the vehicle at the consumer's address within five days.
Walt Dworshack of Ontario, Calif., was overjoyed at the thought of buying a 2009 Ford F-150 for $7,500.
"It was such a good deal," he says, after wiring $3,000 to what he thought was a legitimate dealership in Memphis, Tenn. "I just feel so stupid that I'd be taken that easily."
The Memphis dealership was America Auto Sales. Manager Jacob Johnson says he realized his company's reputation was compromised when the phone calls started pouring in from irate "customers" demanding their cars.
In June 2010, the BBB of the Mid-South received more than 1,800 complaints regarding this scam. Websites like this have posed as different dealers in Colorado, Florida, Georgia, Michigan, New Mexico and Texas.
"Many of the con artists work their deception from Eastern Bloc or African countries," says Philip Reed, senior consumer advice editor for Edmunds.com, an online automotive resource.
Edmunds successfully shut down two fraudulent websites last year that stole their identity.
"Law enforcement is challenged by Internet schemes because they cannot be confined within national boundaries or investigative jurisdictions," said Louis M. Reigel III, assistant director of the FBI's cyber division.
The websites are often taken down after a few days only to avoid detection and crop up shortly thereafter under a different URL and the auspices of another legitimate dealer.
"People need to do their homework when it comes to buying a car online," Johnson says. "You send your money and then there's no recourse if something goes wrong."