Introduction
Buying or selling a used car can be a practical decision. The buyer gets a vehicle for a lower price than the cost of a new vehicle, and the seller gets some value out of a vehicle they no longer want or need. Unfortunately, the used car market is also a prime target for scammers who can take advantage of people on either side of the transaction.
Many of these scams can appear legitimate, keeping buyers and sellers on high alert. The best way to avoid losing any money is to understand how these fraudsters operate and use this knowledge to make you feel more secure in completing the transaction. Read on to learn about the most common scams and the ways you can protect yourself.
Here are some of the common scams that one should avoid when buying or selling a car:
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Odometer Fraud
Odometer fraud is when sellers roll back the reading on a vehicle’s odometer to make it look less used. A vehicle with an odometer reading of 80000 km could have travelled over 150000 km already. Odometer fraud makes the car look newer and can justify a higher selling price.
To avoid being defrauded in this manner, ask about the service history of the vehicle and if the vehicle has passed Ontario safety standards checks, and compare the historical mileage to the current reading. Many newer vehicles have mileage recorded in many computerized systems that a mechanic can locate. If the numbers don’t match, then you should feel concerned.
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Title Washing
Title washing is when sellers conceal a vehicle’s bad history, for example, the vehicle was written off as salvage or flood-damaged. Sellers do this by moving the car amongst provinces or even countries, which occasionally clears the “salvage” or “rebuilt” status on the title. The consumer then unknowingly purchases a vehicle that can have serious structural deficiencies or safety issues.
Always check the car’s history through a formal vehicle history report. The report will show if the car was involved in major accidents, floods, or insurance write-offs. Never proceed with a deal if the seller will not provide a proper title, or tries to discourage you from running those checks.
Also Read: Title Jumping in Ontario: Why It’s Illegal and How to Stay Protected
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Curbstoning
Curbstoners are unlicensed dealers who try to look like private sellers. They will purchase a damaged or high-mileage vehicle, fix it up cheaply, and then sell it for a profit while hiding the problem. Because they are not registered dealers, you will have no legal recourse if the car is unreliable.
Avoid sellers who constantly have new listings online or ask you to meet 3 blocks away from their home address. From you, ask to see the ownership documents and ensure the name on the ownership documents matches the ownership title on the vehicle. If they refuse or hesitate to show you ownership documents, it is probably best to just leave and walk away.
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Fake Escrow or Payment Services
Scammers may use online transaction channels in a more brazen way of suggesting escrow or third-party payment services that look legitimate and offer protection to both parties, scamming you. However, the truth is that those services are usually a scam as well, and once you have transferred the money, the scammer will disappear, and you will never get that car. Keep safe by always using trusted and recognizable payment methods.
When considering making a high-value transaction, such as a car, it’s invariably best to meet in person at a safe location, such as a bank, so you can verify that your funds have been transferred on the spot. Never send money via wire transfer, or any app or service that you are not familiar with, to someone you haven’t met before.
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Fake Buyers and Overpayment Scams
Sellers are also at risk. One of the common scams involves a buyer sending a cheque for more than the purchase price. The buyer then asks you to refund the extra amount you’ve received.
The cheque then bounces, leaving you without a car and without the money you refunded. Never accept a personal or cashier’s cheque from unknown buyers. Only accept payment through safe methods, like a bank draft or direct bank transfer. Be sure it has cleared before letting go of the keys or the documents.
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VIN Cloning
Some scam artists copy a Vehicle Identification Number (VIN) from a legitimate vehicle and use it to mask a stolen vehicle. Buyers who do not verify the VIN could end up purchasing a stolen vehicle that law enforcement might later seize.
To eliminate this risk, it is critical to compare the VIN on the actual vehicle with the VIN on the owner’s paperwork. Always pull a history report, which can be easily done with just the VIN, and verify the VIN found on the ownership papers exists at multiple locations on the vehicle, such as the dashboard, driver’s side door, and engine compartment.
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Online Listing Scams
Scams on online listings commonly have cars priced below market value. The scammer pretends to be moving, going away for military service, or in some form of hurry, and will ask for a deposit to hold the car for a very short period of time. After sending the funds, the listing is gone. Be cautious of listings that look too good to be true.
Compare other similar prices in your area, and never send deposits until you see and test drive the car. If the seller puts you in a rush to send money before they lose the car to someone else, it is probably a scam.
Also Read: 5 Reasons to Avoid Selling Your Junk Car on Online Marketplaces
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Escaping Trade-In Manipulation
While selling your car to a dealership, some dealerships may try to undervalue your trade-in by overstating flaws or defects and failing to acknowledge repair services you have performed on your vehicle more recently. While this behaviour may not necessarily be illegal, it is misleading and minimizes the estimated value of your vehicle.
The best way to avoid this situation is to have three or more quotes for your vehicle through local dealerships or online services before you negotiate your trade-in. If you are aware of the value of your vehicle, you will be better positioned to negotiate the price of your trade-in.
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Fake Vehicle Inspection or Certification
Some sellers attempt to provide phony vehicle inspections and or vehicle certifications to say the vehicle is roadworthy. Buyers say and trust the seller, and they don’t assume there will be huge repair costs shortly after buying the vehicle.
Never rely solely on documents provided by the seller. Always schedule an inspection with a trusted, independent mechanic. The inspection could be minor compared to repair costs that can occur long after the sale.
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Online Identity Theft Scams
Scammers may also act as buyers and request sellers’ unnecessary personal information, such as copies of your driver’s license and banking information. Once information is requested, it could easily be used for identity theft.
Only provide sellers with as little information as needed. If possible, meet buyers in safe, public locations, and do not give them any documents until you know payment is verified. Here are some of the most common scams in the used car market and how you can avoid them
Signs You Are Dealing with a Scam
While scams differ in methods, many share common warning signs. Watch out for:
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- Sellers or buyers who refuse to meet in person.
- Prices that are far below the market average.
- High-pressure tactics to complete the deal quickly.
- Refusal to provide service records or ownership documents.
- Requests for unusual payment methods.
Final Thoughts
The used car market, both in Ontario and elsewhere, provides substantial potential profit; however, it is accompanied by risks. There are a multitude of scams, including odometer fraud, title washing, fake payments, and online listing scams.
You can protect yourself from significant financial losses by verifying documents, examining the history of the vehicle, arranging to meet in safe places, and being conscious of unrealistic deals. By staying alert and cautious, you can avoid costly mistakes and ensure a fair deal when buying or selling a car.
