#Automotive
Unusually low price
One of the oldest red flags in the book – the “too good to be true” deal. Used cars are especially vulnerable to these scams as many people are looking for a low price. And it’s hard to say if everything is as it should be through visual inspection.
VIN (Vehicle Identification Number) swapping
VIN swapping is a type of fraud where a stolen car’s VIN is changed to a legitimate one to trick buyers. Scammers then replace documents and VIN numbers in the vehicle to make it appear legit.
Lack of service or vehicle history report
A lack of a vehicle history report is a major red flag because it’s commonly used to hide problems. Without a repair history, it’ll be hard for you to assess the value of the car properly.
Warm engine
A simple red flag is having the engine warm when you arrive to make an inspection. Some vehicle issues are only apparent on cold-starts.
Odometer fraud
If you suspect that the odometer has been rolled back or tampered with, that should be a major red flag. Scammers will roll back the mileage to inflate the car’s value.
Liens against the car
A lien means that some other entity has part ownership of the car in question. A lienholder will have the right to sell the vehicle if the debt is not paid off.
If the seller demands you use some escrow service “to keep the transaction safe”, it should be considered as a red flag. While there are plenty of reasons to use legitimate ones, scam artists sometimes use a fake escrow service to steal your money.
Sale agreement in another person's name
You should always be buying a used vehicle directly from the first party. Sale agreements with a third-party are one of the many red flags.
Lower sale price in the agreement
A lower sale price in paperwork is an issue for a car buyer because if something goes wrong, there’s less legal recourse.
Pushy sellers
Sometimes sellers will attempt to get you to close the deal as quickly as possible. Common strategies include telling you there’s a lot of people interested, telling you they don’t have a lot of time, etc.
No test drive
Another common warning sign is if the seller refuses to give you a test drive. It’s likely an attempt to hide issues with the vehicle.
False advertising
Vehicle listings may include various mismatching information, which would be considered false advertising. Remembering the entire listing may be difficult, but any mismatch should be a warning sign.
Fraudulent wire transfers & deposits before pre-purchase inspection
Money upfront is considered one of the many warning signs of a scam in all areas, not just car purchases. You should avoid doing so.
Title washing
Title washing is the fraudulent practice of replacing the negative history of a vehicle by forgery or exploiting lenient laws. For example, scammers may use laws that allow them to modify salvage titles to make the vehicle seem more valuable.
Curbstoning
Another scam that’s somewhat common when buying a car is curbstoning – the practice of unlicensed dealers pretending to be private sellers. Some cars may be too difficult to sell in a dealership, so they’ll attempt to work around the issue.
The car buying process is covered under numerous laws in each country. From taxation to car requirements, all of these may be abused by scammers to turn a larger profit.
What are possible red flags or signs of a scam when buying a car?
Cars are sufficiently complicated, expensive, and vital to most people. Which makes vehicles a common source of scams.
Scammers have many opportunities to prey on less savvy people, ranging from hiding technical flaws to abusing laws to their favor. Here’s what you should be looking out for:
Technical red flags
Unusually low price
One of the oldest red flags in the book – the “too good to be true” deal. Used cars are especially vulnerable to these scams as many people are looking for a low price. And it’s hard to say if everything is as it should be through visual inspection.
So, if the price seems much lower than the market rate, you should be suspicious. Always ask why the price is so low.
While every scammer will give some heartbreaking story, you can evaluate the legitimacy of the narrative at the very least.
Additionally, a legitimate seller might give reasons that are not immediately obvious (common issues, long service history, etc). It’ll help you decide.
Finally, have the car inspected by a professional who will help you understand the market value better.
VIN (Vehicle Identification Number) swapping
VIN swapping is a type of fraud where a stolen car’s VIN is changed to a legitimate one to trick buyers. Scammers then replace documents and VIN numbers in the vehicle to make it appear legit.
That’s why you should always perform a VIN check independently. You’ll be able to see the vehicle’s history and look for any mismatches.
Additionally, look for VIN in the usual locations in the vehicle: typically on the dashboard near the windshield, on the driver’s side door frame, and on the engine block. Mismatches or signs of tampering are huge red flags.
Further reading: What is VIN and where to find it
Finally, take extra caution when looking at the documentation. Look for any signs of forgery there as well.
Lack of service or vehicle history report
A lack of a vehicle history report is a major red flag because it’s commonly used to hide problems. Without a repair history, it’ll be hard for you to assess the value of the car properly.
If you plan on reselling the car some time in the future, car maintenance records will also increase the value.
In general, you should be expecting to get a low price for a used car without a service history. If you want to buy such a vehicle, bring in a professional so they can inspect and uncover hidden problems.
Warm engine
A simple red flag is having the engine warm when you arrive to make an inspection. Some vehicle issues are only apparent on cold-starts.
Warm engines can help scam artists hide faults in used vehicles, allowing them to get a better price for no real reason.
Odometer fraud
If you suspect that the odometer has been rolled back or tampered with, that should be a major red flag. Scammers will roll back the mileage to inflate the car’s value.
Mileage is incredibly important for understanding the maintenance requirements, likelihood of issues, and many other aspects of the car. Odometer rollback ruins all of that. It’s actually illegal in many countries.
To check for rollback, ask for vehicle inspection history. Mileage should be recorded at each service, so any mismatch should be considered a red flag.
If you discover a car with a rolled back odometer, it may be important to inform your local law enforcement agency. They’ll be able to investigate or refer you to someone who can.
Pro tip: You can check typical mileage, common faults, and potential maintenance needs by a vehicle's make and year with the OBDeleven VIN lookup – simply enter a VIN, and you'll get a detailed, AI-driven report in seconds.
Legal red flags
Liens against the car
A lien means that some other entity has part ownership of the car in question. A lienholder will have the right to sell the vehicle if the debt is not paid off.
You should be extremely careful when considering a used car with an unpaid loan on it. The seller might not even have the right to sell you the vehicle.
Even if they do, you may become responsible for paying off the debt or the lienholder may have the right to repossess the vehicle.
If the deal still seems good, make sure to take these steps:
- Do a VIN checkup and title search. It may help you uncover any outstanding debts.
- Ask for proof of a lien release. It’s a document that tells you that the debt has been covered. Alternatively, if the debt is still outstanding, find an escrow service or arrange a meeting with the holder before buying the vehicle.
- Wait until lien release has been verified. Finalize the sale only after you’re sure that the debt has been covered.
Fake escrow services
If the seller demands you use some escrow service “to keep the transaction safe”, it should be considered as a red flag. While there are plenty of reasons to use legitimate ones, scam artists sometimes use a fake escrow service to steal your money.
So if the seller provides some unknown escrow service, you should be concerned. It’s best if you can offer and use one you know and trust.
If they continue pushing, you should be extremely careful. Cross-verify the legitimacy of the service through multiple sources such as the Better Business Bureau.
Additionally, avoid wire transfers or any other payment methods that leave no trace or legal recourse for you.
In general, it may be best to walk away from the transaction if there’s too many red flags.
Sale agreement in another person's name
You should always be buying a used vehicle directly from the first party. Sale agreements with a third-party are one of the many red flags.
First, the seller may not even be legally allowed to sell you the vehicle, allowing some third-party to repossess the car at some point in the future.
It’s also a common way to perform tax evasion as the person selling you the used vehicle isn’t being legally traced to the transaction.
You should always insist on having the correct paperwork. Such a request is perfectly reasonable, so all sellers should be willing to make amendments.
Mismatches can also be an issue if you need to get a refund – your legal recourse would be to the person that’s named in the agreement.
Additionally, check that the vehicle’s title, names on sale agreements and IDs all match. There may be more going on such as an attempt to sell a stolen vehicle.
Finally, even if you do get the correct paperwork, verify that the owner's driver's license matches the agreement.
Lower sale price in the agreement
A lower sale price in paperwork is an issue for a car buyer because if something goes wrong, there’s less legal recourse.
If you were to get a refund, the price listed in the agreement would be considered the full sum. Even if you did actually pay more.
The seller may also be attempting to commit tax evasion, which may affect you in some countries as both parties may be held liable for such crime.
Always ask the seller to amend the paperwork to reflect the full sum. You’ll protect yourself if you need a refund and reduce the likelihood of getting in legal trouble.
Salesmanship car buying scams
Pushy sellers
Sometimes sellers will attempt to get you to close the deal as quickly as possible. Common strategies include telling you there’s a lot of people interested, telling you they don’t have a lot of time, etc.
These are all red flags. You should never be in a rush to buy a car and the seller should understand that.
Scammers will attempt to pressure you psychologically and focus on the sale, attempting to hide various malfunctions or issues with the vehicle.
Always take your time and ask for documentation, service history, VIN, and everything else. If the seller tells you they don’t have the time, it may be better to just walk away.
No test drive
Another common warning sign is if the seller refuses to give you a test drive. It’s likely an attempt to hide issues with the vehicle.
You should never buy a used car without getting to drive it around for a bit. There’s simply way too many opportunities to hide important problems with the vehicle if you don’t get to drive it around.
Even with a test, some issues may slip your attention. Imagine how many may go unnoticed without one.
Online car buying scams
False advertising
Vehicle listings may include various mismatching information, which would be considered false advertising. Remembering the entire listing may be difficult, but any mismatch should be a warning sign.
Additionally, you can evaluate some potential false advertising attempts without leaving your house. If the photos and description have any mismatch, that’s a red flag.
Finally, look up the VIN, car’s title, and run a vehicle history check before heading over to make the purchase. You may be able to uncover hidden issues with the car that would otherwise slip your attention.
Fraudulent wire transfers & deposits before pre-purchase inspection
Money upfront is considered one of the many warning signs of a scam in all areas, not just car purchases. You should avoid doing so.
Avoid wire transfers, especially if you’ve never met the seller and inspected the vehicle. Wire transfers will make it hard (or impossible) for you to retrieve the money if something goes wrong.
Some sellers may attempt to trick you into making the car inspection “worth their time” and ask for a deposit. If the seller pushes you to do so, it’s highly likely it’s a scam and they’ll run off with the money.
Title washing
Title washing is the fraudulent practice of replacing the negative history of a vehicle by forgery or exploiting lenient laws. For example, scammers may use laws that allow them to modify salvage titles to make the vehicle seem more valuable.
As with most car scams, getting a verifiable service history is your first course of action. Checking up on VIN and title is another step you should take.
Additionally, be cautious when buying cars from out-of-state (or out-of-country) sources. Especially if those cars are in countries or states where salvage titles have a lot of leniency surrounding them.
Curbstoning
Another scam that’s somewhat common when buying a car is curbstoning – the practice of unlicensed dealers pretending to be private sellers. Some cars may be too difficult to sell in a dealership, so they’ll attempt to work around the issue.
Curbstoners typically attempted to sell used or damaged cars that would be otherwise a tough sale due to information disclosure in a dealership. In private sales, however, they’ll attempt to hide as much as possible.
As with many other car buying scams, you always have the vehicle inspected by a professional and request service history reports. Additionally, make sure to see the title and match the name on it with the seller’s ID.
Another dead giveaway for curbstoning is a person having numerous listings available. These may be indicators that an unlicensed dealer is attempting to sell used cars at inflated market value.
How to report scams
The car buying process is covered under numerous laws in each country. From taxation to car requirements, all of these may be abused by scammers to turn a larger profit.
If you suspect someone is running a car buying scam, whether online or offline, your first course of action should be to report that person to your local law enforcement. They will be able to investigate or direct you to responsible parties.
If the scam is related to technical features (such as odometer rollback) or forgery of the car’s history, you may want to report them to your local DMV or automotive authority as well.
Finally, if you suspect someone is committing financial fraud such as setting up a fake escrow service, performing tax evasion, or scamming through wire transfers, you should report them to your tax and financial crime agency.