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Scams To Avoid When Selling A Car

Scams To Avoid When Selling A Car

Whether it's time for a different car or just a bit of extra cash, selling your vehicle by yourself can be a great way to bring in funds quickly. This process should be quick and straightforward with the rise of online marketplaces and easy-access classifieds. But, unfortunately, you may have to deal with an ever-increasing problem in the vehicle market: Scams. As car-selling fraud becomes more prevalent, understanding how to sell a car without getting scammed is essential. It's important to be aware of typical fraudulent tactics to save both time and money while also avoiding common mistakes that sellers often make.

4 Common Car-Selling Scams

1. Car Sale Phishing

While money is the most common thing auto scammers want to take, they’ll also benefit from stealing your private information. Bank numbers, login information, credit cards, and passwords: scammers will try to get as much of this as possible. With this info, they can wreak havoc on your financial health, potentially draining your bank account, opening credit cards in your name, and even stealing your identity. In addition to all of that, you also won’t receive the car you may have already paid for.

When it comes to selling cars, the most common way scammers get this information is by asking for extra verification. It’s relatively common to provide a buyer with certain information before a sale, including a VIN number. This lets them use tools like a VIN decoder to learn more about the car’s manufacturing origins or to use the number to get a vehicle history report. The issue arises when they ask for more and more information to “verify” that you aren’t the scammer, and in the process, they will phish you for all you’re worth.

2. Confirmed Buyer Scam

If you list your vehicle online, the listing site may send you a series of messages with status updates about your car’s buying potential. With a confirmed buyer scam, you’ll get two distinct messages: one informing you about the numerous buyers interested in your vehicle and another stating that you have a “confirmed buyer.” After that, they will request a finders fee of anywhere from $100 to $1000, depending on the vehicle’s value. These usually come with a money-back guarantee, and if you want to get rid of your car quickly, it may sound like an attractive prospect.

You send your money, but you never hear from this person again and you find yourself entangled in one of the many car selling scams out there. If this is done through a wire transfer or cashier’s check, you’ll likely be unable to get these losses back. Even getting a credit card refund may be difficult, as part of this process usually involves authorization from the vehicle seller.

3. Fake Escrow Scam

One form of payment a buyer may offer is to use an escrow account. Escrow accounts are a way to hold funds until a product is delivered, in this case, your vehicle. A legitimate account is a very safe way to conduct a transaction; unfortunately, scammers will create fake escrow accounts to trick buyers and sellers alike. These scammers will either ask you to deposit money for shipping or some other reason or direct you to a fake escrow website designed to steal your information and drain your bank account.

In the worst-case scenario a prevalent form of car selling scams involve victims sending the vehicle before the funds have been released. Scammers will refuse to send the money; even if the escrow service is legitimate, there isn’t much they can do. If you haven’t confirmed the buyer’s identity or have no way of contacting them, the chances are slim that you’ll be able to recover your car.

4. PayPal Scam

One of the most critical steps that sellers should concern themselves with is payment, and with the rising number of third-party payment companies, a buyer may offer to pay online or through an app. PayPal is one of the more popular options for virtual transactions, but it isn't ideal when selling your car.

The auto scammer will likely email or text you shortly after listing your vehicle. This supposed "buyer" will ask almost no questions about the car but claim that they need to purchase it quickly. Most of the time, they will offer over the asking price to speed up the process. The need for expediency is usually waved away with an excuse relating to their job or an accident resulting in their former transportation being totaled. The scammer will then tell you they can only pay over PayPal and ask for your account.

The scam comes in when they say they need a certain amount of money for shipping,highlighting a prevalent scam when you sell a car. The total sale amount may even appear to be pending, with an email from PayPal stating that the money is awaiting approval to be released. Once you send the shipping payment, unfortunately, you'll never see that pending payment. In all likelihood, the scammer faked the email showing the pending amount, and they now have hundreds or thousands of dollars (that PayPal isn’t likely to return to you.)

5. Asking for a “Payment Plan”

Another common scam when selling your car is a potential buyer asking for a payment plan. Payment plans are usually reserved for those buying through a dealership or getting a loan from a bank and involve paying a monthly fee in addition to some interest. Payment plans are rarely done for private sales; they are an added hassle, and you don’t have the same contract that a bank or lender will require.

For a payment plan scam, a buyer will convince you that they are trustworthy but don’t have enough money to pay the total amount for the car. They will likely agree to a price above market and a decent amount of interest, then make the first one or two payments. After that, you won’t hear from them again. You’ll receive maybe a few hundred dollars, and they’ll get a car potentially worth thousands.

How to Avoid Car Selling Scams

One of the best ways to avoid car selling scams is to get all the available information about your car before you sell it. Some people approach the used car market and set whatever price they believe their car is worth without doing any prior research; this gives scammers an advantage and can make assessing an offered validity more difficult. Getting a vehicle history report can help you find your car’s true value and set a fair market price when you sell; that way, you can spot an offer that seems “too good to be true.”

How to Avoid Car Sale Phishing

According to the Federal Trade Commission, there are several ways you can avoid these types of scams:

  • Watch for Strange Emails or Texts: If the car buyer has your phone number or email, you may notice some odd messages shortly after they get your info. These emails may be claiming to come from any number of websites and will usually ask you to log in or update your account. Once you do, the phisher will have access to those accounts and be able to operate as though they are you. Watch for the signs these messages aren’t legitimate: a vague warning about an issue with your account, a lack of clear proof they represent a company, and specific requests for payment or financial details.
  • Only Share Relevant Information: A regular car buyer won’t be concerned with anything but the vehicle itself, including its history, condition, and how recently it’s been repaired. So if someone is asking questions about anything but the car itself, that’s usually a sign they are looking to steal your information.
  • Make Sure Your Cell Phone is Protected: A buyer will likely want to meet up before a transaction is finalized, so it's good to make sure your cellphone is password protected, and any security software is updated. You may be getting paperwork out of the glovebox or otherwise distracted while they are looking the car over; if you leave your phone in the open, scammers may use this as an opportunity to access any apps you are already logged into.

How to Avoid the Confirmed Buyer Scam

To avoid falling prey to a confirmed buyer scam, you’ll want to:

  • Find Your Car’s True Value: A confirmed buyer scam is only effective if you don’t know the actual value of your vehicle. If the offer a scammer is giving you is much higher than the market value, that should be a huge red flag that something is off. To get the value of your car, you’ll want to start by getting a vehicle history report. These reports can provide a way to determine your car’s resale value, including showing you its accident history, maintenance records, and previous ownership.
  • Confirm a Buyer’s Identity: One thing that scammers will always avoid is identifying themselves; Do whatever you can to confirm a buyer’s identity before sending any money. This can be done through a phone call, or if possible, by meeting in person.
  • Use a Safe Form of Payment: Many third party-payment companies won’t guarantee your transaction, and sites like eBay and Craigslist will likely not help you if you get scammed. Make sure any transaction happens through a safer payment option, like a credit card. That way, if a scam does occur, you can contact their fraud department and (hopefully) get your money back.
How to Avoid the Confirmed Buyer Scam

How to Avoid a Fake Escrow Scam

According to the Department of Financial Protection and Innovation, here are some ways you can avoid falling prey to an escrow scam

  • Verify the Service With the DFPI: One of the easiest ways to ensure that an escrow service is legitimate is to call the Department of Financial Protection and Innovation at 1-866-275-2677. They will do what they can to check if the company is appropriately licensed and give you tips on what to look for in fraudulent companies.
  • Don’t Share Personal Information: Unless you verify that the escrow service is legitimate, do not share any financial information. This includes your credit card numbers, banking information, and social security number as part of protecting yourself from potential car selling scams. You also want to avoid providing any details about your personal identity, like your full name, phone number, or address, without verifying the buyer’s information. All they should need initially is basic information about the car; asking for anything more than that is suspicious.
  • Look for Fraud Red Flags: Check the website of the escrow service and see what information they provide about their company. A fake website will likely feature poorly constructed content riddled with spelling errors. Make sure not to enter any information into the website, as this may lead to phishing.

These scams will also usually lack a physical address or phone number. If they do provide a phone number, make sure to call and check that you can actually speak to someone. Some fake escrow services will create a fake voicemail to increase their legitimacy, but the facade quickly falls apart if you call.

How to Avoid a PayPal Scam

According to PayPal, there are a few ways to avoid a PayPal scam:

  • Check the Email Address: A crucial part of a car selling scams through PayPal is the email indicating funds are pending for your account. Emails may seem to come from a company representative or PayPal Services, but if you check the address itself by clicking reply, you will be able to see their full email address. Any official correspondence from PayPal will come from PayPal.com in addition to carrying their logo. Scammers will try to fake both the logo and the address as closely as possible, so make sure to be on the lookout for inconsistencies.
  • Make Sure Offer is Appropriate: PayPal fraudsters will usually give you an offer well above market price to help expedite the process and get you to overlook red flags. Make sure to find the real value of your car; a vehicle history report can help with this. Once you have the value, be wary of high offers or anyone asking for an advance fee. You'll rarely need to send a buyer money for taxes or shipping before they release any money. In all likelihood, they will take this money and never send the funds at all.
  • Verify Through PayPal Account: If you are trying to sell your car quickly and get an email saying they can pay now, you may be too excited to verify the money exists. You should confirm any email from PayPal by logging in to your PayPal account to check that the money has been transferred. You also should avoid following any email links, as this can lead to a fake PayPal login that will steal your account credentials, a common technique in scams when you sell a car.

How to Avoid a Payment Plan Scam

The best way to avoid this scam is never to offer a payment plan. You aren’t a bank or lender with a legal team ready and waiting for those who refuse to pay; if a scammer wants to stop making their monthly payments, you have little recourse to get them to settle up. If you do want a payment plan in place, it needs to be with someone you know and trust. This means a family member, close personal friend, or anyone else who you see on a regular basis. 

If, for whatever reason, you do decide to do a payment plan for someone you don’t know as well, you need extensive contact information. This information should include full legal name, place of residence, financial information, and whatever details guarantee they won’t just take the car and run. But again, this isn’t preferable. Instead, you should take the entire car payment from a secure source like a credit card or cash.