Watch Out for These 10 Auto Buying Scams

Posted by: Dan on 7/12/2015

Category: General

The auto industry is huge. Drive through any major city, and you’ll see an abundance of dealerships lining the streets. The same is true of the suburbs, and even the countryside.


Yet, while the majority of auto sellers and dealers and sellers are honest, scams do exist that you need know about. It might be tempting to think that these scammers are easy to spot, but the reality is very different. According to the Australian Competition and Consumer Commission Australians lost $89 million in scams during 2013 alone.


Read on to ensure you aren’t next in line:

Buying a local car online without being allowed to see the car

In the day and age of online shopping and buying, it’s no surprise that the auto industry has garnered a big following across the internet. If you’re in the market for a new car, it’s totally fine to search online, as many good deals can be found via the internet.


But that said, it’s always ideal to see the car before you buy. If you find a seller who’s unwilling to show you the car before purchase, stop any further negotiation with them. Though it is among the more uncommon of auto scams online, there are still buyers who have fallen for buying what they thought what a decent auto based on a picture and price tag alone - only to be stuck with a complete lemon.

Being unable to go for a test drive before you buy

Following on from the above, any hesitance by the seller to let you see or operate a particular aspect of the car before purchase should be taken as a huge warning sign. If you aren’t allowed to test the vehicle before buying it, assume the seller is trying to hide something you’d rather know about up front.

Unwillingness to provide evidence of the car via correspondence

While buying a car locally is ideal, sometimes, to get your desired model at a good price, you need to look beyond your city. If you’re buying the car from overseas or importing from another country - and it’s not possible to visit and see it in person due to time or distance constraints - it’s critical that you take your time during the inspection process.


Don’t be afraid to ask for as many photos as you like - even a basic video clip of two of the car engine running or driving around a parking lot. In turn, it’s also wise to use third parties to establish whether the current car has any outstanding fines or fees. If there’s any hesitation on the part of the seller to show evidence establishing the car’s condition, it could be a warning sign telling you to stay away.

Issuing fraudulent representations of the car’s condition

If the car is listed as mint condition, it should be in mint condition. Some understanding of another person’s busy life is fine, but it should not mean corrosive rust underneath the front bumper or tyres they’ve advertised as new that are actually used.


In turn, while it's fair to have some latitude here - say, if you’ve noticed on your drive that the breaks could be a bit sharper and the seller offers to discount the price of a service at the mechanic from the total cost - anything that appears a significant misrepresentation of the car's condition (such as a door not opening properly or the transmission stalling) means it is time to walk away.

Unwillingness to use a verified payment method

If you’re buying online, another scam to be aware of is a seller who asks you to go outside of a verified payment method. While using Paypal, Google Wallet and Clickbank represent solid forms of payment security when it comes to online purchases, if your seller asks for a direct bank deposit, refuse.


While, for small purchase under $100, such an arrangement is common and normal, using direct transfers to move sizeable funds is a warning sign. While your bank will endeavour to retrieve the money for you in the event of fraud, direct deposits can be very hard to return - especially if your scammer is someone who used an offshore or overseas bank account.

Seeking to significantly alter the deal and payment process

It’s important to remain reasonable, as circumstances can change. If someone asks you pay a separate account that’s still in their name, or asks if you could make payment a day earlier if a public holiday is forthcoming, such a request is not in and of itself a red flag.


But if you’ve bought the car online from one user and are then messaged from another asking to complete the deal through their account? Walk away (or, at the very least, get every part of your final agreement in writing).

Indicating the auto is no longer available and trying to swap for another one

Imagine walking up to a dealership and, instead of seeing the car you thought you were buying, seeing a different model that either costs more or comes with a lesser value (without refunding you the difference, of course).


While it’s important to remain calm and polite, if a dealership presents you with the wrong car, remove yourself from the scene, go home and send them an email so that you have something in writing. Indicate that you expect the vehicle you paid for to be provided or else a full refund is required. If they don’t follow through on this, indicate that you’ll be following the matter up with consumer affairs, the office of fair trading, or the applicable consumer protection group within your own state.

Offering to trade in for your current vehicle right away, with delivery of your new car a later date

Trade ins for vehicles are common, and are a great way to reduce the cost of the your next car by using the equity in your hold one. Yet, even with a renowned dealership, it’s always best to trade in your vehicle at the same time you’re set to receive your new car.


In turn, any arrangement being discussed with a prospective seller that would see you provide your current car to them before receiving your new one - with the promise the new one is ‘on its way’ - is a warning sign. After all, if they’re simply a private seller looking to sell a car they no longer need, why would there be a rush to acquire another one?

Discount offered for forgoing proper paperwork

When considered by itself, a discount offered on a cash sale is not a bad thing. Indeed you can get a solid deal buying a car for cash, as doing so often allows the seller to avoid expenses from credit card processors (and the other operating fees of a dealership).


That said, just make sure a conversation surrounding a cash discount doesn't then segue into a discussion about forgoing paperwork or proof of car ownership and history. While local laws vary on what documents are required for a sale, it’s also a reality that sellers undertake a process via their local police or roads authority to verify the car’s ownership. If they’re unwilling to do so, it’s clear they’ve not taken sufficient steps to prepare their car for sale - and this alone should serve as a red flag to a prospective buyer.

Asking to meet at a secluded space (or any other threatening behavior)


This is an unfortunate reality of online buying that isn’t just confined to online auto scams, but applies to the wider internet shopping experience as well. Once more, while 99% of traders are good and honest people, there are a rare few who seek to take advantage of those seeking to shop online.


Therefore, if you find yourself uncomfortable while discussing a deal at any time, you’re well within your rights to walk away. Remember, many scammers are well practiced at what they do, which is why it’s in your best interests to be aware of your local laws and buyer's rights as you proceed through the arrangement. If you have not made and fulfilled a contract to buy the car, you’re not obligated to proceed with any further business - period.

Got another tip you’d like to add to this list? Leave a comment below to help us keep auto buyers safe:


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