Repo Rip-Offs

Scammers have found a new route to bilking online car shoppers out of thousands of dollars: Posing as legitimate dealerships, crooks set up fraudulent look-alike websites that claim to be selling repossessed vehicles at bargain prices.

You are asked for a wired deposit of up to $5,000 to reserve a hugely discounted car. Send the money to a dealership salesperson rather than the business itself, you’re told: This lets you avoid paying taxes on the purchase.

But when you arrive at the authentic dealership to claim the car and pay the balance, you discover you’ve been taken for a ride: There is no car. And no way to get your money back.

So far, repo rip-off websites have masqueraded as the sites of legit dealerships in at least eight states—Colorado, Florida, Georgia, Kentucky, Michigan, New Mexico, Tennessee and Texas.

“Car shoppers will think that they’re buying a car from a reputable business,” says Stephen A. Cox, president of the Council of Better Business Bureaus, in a news release about the ploy. “The truth is, they’re being sold a bill of goods by a coordinated, agile and in all likelihood overseas outfit of scammers.”

Victims are steered to the fraudulent websites through Internet searches or advertisements in local car-selling publications, often fooled by look-alike website addresses: The scam site’s address may differ by just a letter or two from that of a real dealership’s site.

Two more car-sales scams

While repo deception is the latest car scam, there are other methods of targeting online car shoppers.

One involves Internet advertisements placed on Craigslist and other sale sites by “private sellers” who also request wire-transfer deposits or payment. Their incredible offers are often explained by a hard-luck story: The car needs to be sold right away because its owner is a soldier being deployed to Afghanistan or an unemployed single mother who needs quick cash.

Another variation involves phony escrow companies, which also may steal the names of legitimate businesses. After posting a vehicle for sale online, the scammer refers the buyer to an alleged third party that promises a safe online transaction by collecting the purchase money, again usually requesting a wire transfer.

Tips for online car shoppers

If you’re shopping for a car online, here’s how to protect yourself:

• Use the phone. A sure sign of a scam is a “seller” who communicates only by e-mail. You should insist on a phone number to establish a seller’s legitimacy (you can go to online phone directories to cross-check a number the seller provides you). Any overseas number will be a sure sign of a rip-off.

• See and touch the vehicle. Before you buy, insist on a test drive and an inspection by a mechanic.

• Be realistic about price. Sure, there are deals in a tough economy, but for a reality check on what particular car models sell for, visit edmunds.com, .kbb.com or truecar.com.

• Never, never pay with a wire transfer. Legit dealerships don’t request them. Scammers do, because once you provide the confirmation number, a Western Union or MoneyGram transfer can be picked up anywhere in the world—no matter where you think you’re sending it. Wire transfers claimed abroad are untouchable by U.S. law enforcement.

• You can avoid a lot of these hassles from the start by dealing only through established online car-sale sites such as autotrader.com or vehix.com, or by carefully typing the website address of a local dealership that you trust.

Sid Kirchheimer is author of Scam-Proof Your Life, published by AARP Books/Sterling.