How to Spot and Avoid Scams When Buying Your Next Car

Unethical practices

Car dealerships have been known to use a variety of methods to get more money from buyers. A dealer might advertise a car at what appears to be an attractive price to get customers through the front door. But then, after someone decides to purchase the vehicle, the dealer adds a series of questionable fees to cover such things as inspections or, for used cars, reconditioning.

Some might even double charge you for services that were included in the advertised purchase price.

Shady dealerships (“stealerships,” some call them) sometimes try to boost the purchase price by pushing add-ons such as floor mats, alarm systems or anti-rust undercoating at excessive prices.

On April 2, the FTC announced that a Maryland-based automotive company “deceived” consumers for years by “falsely advertis[ing] low prices” and “unwanted add-ons,” leading buyers to pay thousands more for their vehicles. According to the FTC, the automotive group will pay more than $3 million in civil penalties and is now required to disclose the total price, including all mandatory fees, to consumers who are buying or leasing a vehicle.

Some car dealers have also been accused of targeting racial and ethnic minority group members for scams. In Texas, for example, the FTC accused a car dealership of discriminating against Black and brown customers. The agency claims the dealership, which has three different locations, sneaked hidden fees for unwanted add-ons past consumers, charging Black and Latino customers the highest prices.

Used-car scams

Frugal used-car shoppers are also an inviting target for scammers.

One traditional scheme of duplicitous used-car sellers is to roll back a car’s odometer, making it appear that the car has tens of thousands fewer miles than it actually has.  

Private sellers are also sometimes less than forthcoming about a vehicle’s accident or flood damage if it isn’t immediately obvious.

Another common ploy is the virtual vehicle vendor scam (also called the transport company or escrow scam). The Better Business Bureau (BBB) has warned that scammers post attractive ads for nonexistent vehicles on sites like Facebook Marketplace and Craigslist, often claiming the seller is in another city. They then direct buyers to pay a supposed transport or escrow company via wire transfer or prepaid gift cards. The vehicle never arrives, and the money disappears.

Buyers 45 and older accounted for over three-quarters of all reports filed with the BBB Scam Tracker about these virtual vehicle vendor scams. 

Warning signs that a car dealer might not be trustworthy

• A car dealership advertises the make and model you want but then, when you arrive at the dealership, claims that it’s unavailable and tries to get you to buy a more expensive vehicle.
• A dealership salesperson asks for the keys to your car to evaluate it for trade-in purposes but then holds on to the keys while delivering a high-pressure sales pitch.
• A used car is advertised online for a price that seems too good to be true.

How to protect yourself from car-buying scams

• Know your rights. Dealerships must disclose the full price of a vehicle, including all mandatory fees. The advertised price should match the total amount you will actually pay.
• Don’t be afraid to say no. You have the power to refuse any products or services that increase a vehicle’s price, such as rust-proofing, protective paint coatings and extended warranties, among others.
• Scrutinize the paperwork. Car purchases generate a pile of paperwork, but be sure to look it all over carefully. Ask to review your final financing application to ensure it has accurate income and down payment numbers, and that all other personal information is correct. Before you sign anything, make sure all the terms, including the price and financing, are as you agreed.
• Watch out for deceptive claims about car loans or leases. A seemingly low annual percentage rate (APR) may apply only to buyers with really high credit scores. And the “$0 due at lease signing” deal may actually turn out to require several thousand dollars in fees or be available only if you satisfy difficult-to-meet requirements.
• Call a used-car seller. Make sure you talk to the person who is actually selling the car and ask a lot of questions. If the seller gets defensive or aggressive, or gives you vague answers, don’t pursue the deal.
• Dig into a used car’s past. The FTC recommends getting a vehicle history report before you buy, which may include information such as the car’s previous owners, whether it was ever in an accident and its repair records. The federal government site Vehiclehistory.gov has a list of approved providers who can sell you a report.
• Check out a used car in person. Stick to the old-school approach to car shopping: Insist on an in-person inspection and a test-drive before you buy.

Also, make sure you’re not inadvertently paying recurring fees for particular car features (some dealers charge monthly fees for certain add-ons). And be aware of VIN (vehicle identification number) cloning scams, where criminals use a legally registered car’s VIN on a stolen or salvaged vehicle. Learn more in this episode of AARP's podcast The Perfect Scam.

(Read more car buying tips from a longtime car salesperson.)

Report scams

If you suspect a car dealer of breaking the rules, contact the Federal Trade Commission online or call 877-FTC-HELP. You can also contact your state’s attorney general.

Call the AARP Fraud Watch Network Helpline at 877-908-3360 for answers to fraud-related questions and free assistance and support following a scam. The AARP Fraud Watch Network also offers free and confidential virtual support groups for fraud victims.