Car Buying Scam Using PayPal

Watch Out for Scammers When Selling a Car Online

Mar 20, 2010 

Car for Sale - Photo by Dawn Sutton

When Sarah recently placed an ad on several popular websites trying to sell a two year old car with low mileage, she received emails from interested buyers almost immediately. Sarah was convinced her car would be sold and she would have the much needed cash in hand in no time.

She was surprised how similar some of these emails appeared. The interested parties wanted to buy the car through PayPal only and they were emailing from a distant location that prevented them from transferring a payment any other way. One person said they were a crew member with Air Canada and another person said they were conveniently 'at sea.'

It also seemed odd that the buyers asked redundant questions such as the asking price when it was listed right on the ad, or they would ask for pictures even though photos were provided. These potential buyers promised to pay the full price through PayPal without ever seeing the car in person or taking it for a test-drive. Each person had a “pick-up agent” that would pick up the car once the payment was processed.

When Sarah told each of these prospective buyers that she would only accept cash, every one of them discontinued communication with her. She called PayPal to try to find out if this was a recent common scam and how it worked.

How the Car Buying Scam Works Through PayPal

PayPal informed her that some clients purchase an expensive item and then do what they call a “charge-back” – that is they call their credit card company afterward to inform them that they will not authorize that charge. Even though PayPal assured her that she would receive her payment, once a credit card company refuses a charge, then there will be a dispute that could take who knows how long to settle.

She went online and looked for examples of this car buying scam and came across Gerry Gainford’s article. Gerry was asked to send money via Western Union to a shipping company in England to cover pick-up fees of his car.

The buyer sent a verification email from a “mail2pay.com” address to an email account that was not associated with any PayPal account for several thousands of dollars. He was then told that PayPal wouldn’t release such a large sum until he sent the money to his shippers through Western Union.

The Western Union website urges consumers to protect themselves from fraud in the following ways:

• Never send money to someone you do not know personally using a money transfer service.
• Do not use money transfer services to pay for online auction purchases.
• Taxes or fees on foreign lottery winnings should never be paid for through money transfer services.
• Never send a payment in the name of a friend or relative with the intention of changing the name to someone you do not know personally.

If you think you might have been a victim of fraud, you can contact Western Union at 1-800-448-1492.

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Fraud Prevention

Buying a Vehicle Without Getting Ripped Off

Whether you're looking to buy a new orused vehicle, it's in your best interest to keep a watchful eye during the transaction and delivery. Just think about such frauds as modified odometers or vehicles damaged by the elements (hail, for instance) that are repaired and then sold as "brand new"...

Granted, fraud can go the other way around. For example, how many people have tried to submit false claims to their insurance companies? Frauds in the auto industry prove very costly for consumers.

Finally, there are situations in which a third party commits a fraud by stealing some of your personal information and even your own identity. Some will use your driver's license to pull off some kind of theft.

Beware of unscrupulous sellers:

How can you know if the car you just bought has not been used by someone else or damaged by hail or vandals in the dealer's lot? An unscrupulous salesperson might be tempted to keep silent about it. After all, the car still looks brand new. If you want answers, ask questions. If the dealer tries to sell you a demo car or a damaged vehicle that was fully restored, it's up to you to take the risk. But don't be a fool! Ask for compensations or a substantial rebate.

Private sellers could also keep quiet on damage or mechanical issues that the vehicle they're selling might have, so getting it inspected with a written evaluation is always a good idea. If the seller refuses to let you have the car checked out by a mechanic, he or she may have something to hide.

Did you spot a car that's so inexpensive that it seems like a steal? If you contact a seller for extra information, and that person asks you for a cash advance before you even see the car or test drive it, you might be dealing with an unscrupulous seller who's trying to fraud you. If the price seems too good to be true, use extra caution.

The used vehicle market, a jungle?

Before you buy a used vehicle, we recommend that you follow these few tips to avoid getting ripped off:

Do a road test both in the city and on the highway. Check the brakes to see if they're not warped or worn out and if they induce any vibration through the steering wheel. Keep your ears open for the slightest suspicious noise. If the car is equipped with a manual transmission, make sure that the clutch operates properly; with an automatic, shifts should be smooth and unhesitant. If possible, engage neutral and depress the throttle: if you see white or blue smoke in your rearview mirror, the engine might require significant repairs. Also, check the hand brake on a hill to see if it holds the car effectively. At the end of the road test, check the exhaust tip: white or brown is a good sign but if you spot any oil, beware.

Visually inspect the bodywork in broad daylight. Look for bumps, dents, rust or any sign that the car has been reworked. Check the condition of the frame, exhaust system, windows and headlights. Make sure that all gauges and lights operate properly. Apply pressure at each corner to see how the suspension reacts: the car should not bounce more than twice. Examine the brake pedal: it you find it spongy or abnormally soft, this probably means that the braking system is defective.

Inspect the interior, especially the seats, upholstery and seat belts, and make sure that their condition reflects the car's mileage.

Finally, check the engine bay. Pay attention to the hoses and battery. Oil levels and cleanness should be up to standards.

Obligations of the dealer:

When you buy a pre-owned vehicle, make sure you have all the information necessary to make an educated decision. In Quebec, for instance, the L'Office de la protection du consommateur requires all car dealers to include the following information on the label of vehicles on sale:

• The selling price (in the case of a purchase) and retail value (in the case of a lease).

• The mileage indicated on the odometer and the actual mileage (if different).

• The vehicle's production year, serial number, make, model and engine displacement.

• Whether the vehicle has previously been used as a taxi cab, driving school car, police car, ambulance, lease vehicle or demo, as well as the identity of the company or organization which leased the car.

• Any repair performed since the dealer has been in possession of the vehicle.

• The warranty.

A mention that a mechanical verification certificate will be issued and delivered to the buyer.
Suffered an accident? Call your insurer!

This part concerns the consumer. True, consumers have rights, but with those rights come obligations. Should you suffer an accident and damage your car and/or injure yourself, it's your obligation to contact your insurer. Also, you should read your insurance policy to know exactly what will be covered.

When fraud comes from a third party

To avoid frauds associated with your driver's license, the following recommendations will help you:
Keep your driver's license, vehicle registration and insurance certificate on yourself in order to be able to show them on demand. Never leave them inside your car.

At home, keep these documents in a safe place, especially if you share your apartment with someone else or if you hire a cleaning person.

Whenever you get rid of your old driver's license, registration or insurance certificate, tear them apart instead of simply throwing them in the trash.

Never leave your driver's license as a deposit for identification purposes; the personal information contained on your license could allow a third party to commit a fraud by using your name.

Never give your driver's license number to anyone.

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If that used car deal sounds too good to be true, it probably is. If you’ve ever shopped for a used vehicle online, more than likely you’ve run into offers that just seemed too good to be true. As I write this, I’m looking online at a 2006 Audi A4 with just over 30,000 clocked kilometres with a “clear title” and no reported damage with an asking price of only $4,750. How can this car be selling for such a low price when the average price of this model car is going for over $23,000? Something just isn’t right.

It seems that there is a growing trend where web sites that offer free classifieds for private sellers are laden with fraudulent ads. Part of the problem is that it’s all too easy for online criminals to create e-mail accounts that provide no link to their actual identity, so they are able to carry out their fraudulent deeds without too much concern for ever getting caught.

I’ve seen many cases of online vehicle fraud, and in every single instance, the fraudulent seller will either not provide a phone number or else the phone number they do provide is not their own. Often, they’ll just make up a fake phone number knowing that many people prefer sending an e-mail over picking up the phone anyway.

Another cunning trick is to use someone else’s fax number as the main contact phone number, so that the seller will resort to sending an e-mail when they attempt to call and get a fax machine on the other end.

It’s common for online crooks to respond to e-mail inquiries on these types of vehicles by asking the interested party for a deposit on the vehicle. After the unsuspecting car shopper makes their deposit, the crook disappears and is never heard from again. More often than not there is also an overly-complicated story as to why you cannot see the vehicle right away.

Fortunately, avoiding online scams is easy if you know what to look for. Here are some things you can do to avoid putting yourself at risk: