Security Corner Blog

Despite those cons, buying and selling cars online can be safe, as long as you take the proper precautions to protect yourself. Among the reputable online marketplaces for buying and selling cars are Autotrader, CarGurus, CarMax, CarsDirect, Carvana, eBay Motors and Vroom.

Scams to Watch Out for When Buying a Car Online

Here are some of the most common online car-buying scams to look out for—and how to avoid them.

Fake Ads

Some crooks will advertise cars that they don't even own. These ads may appear legitimate, as they typically display photos matching the description of the car. They also may include an email address or phone number to contact the purported seller. To prevent being scammed by a fake ad, ask for details about the car (such as the vehicle identification number, or VIN). Walk away if a private seller refuses to let you inspect the car or declines to meet in person.

Gift Card Ripoffs

Some scammers insist that you pay for a vehicle with gift cards. This is a red flag. Never purchase a car with gift cards. You almost certainly will never see the gift cards again—or see the car you hoped to buy.

Fraudulent Wire Transfers

If a seller asks that money for a car be exchanged through a wire transfer, politely decline to do so. Why? Because it can be difficult to recover your money if the deal turns out to be a scam.

Title Washing

Title washing involves rinsing away a car's history, such as the fact that it sustained major damage in a wreck, or by otherwise masking critical information. It's a scheme often carried out in the sale of a used car, and it's illegal. One way to avoid becoming the victim of a title-washing scam is to order a report that gives you a clear picture of the vehicle's history before you buy it.

Curbstoning

A curbstoner sells used cars without holding the required license or permits, and without maintaining a regular place of business. These fraudulent deals happen in vacant parking lots, along the side of a road or even at the curb in front of a home. Curbstoners typically sell salvaged or damaged cars to unsuspecting buyers, and then disappear without providing any contact information. So that you don't get clobbered by curbstoning, do business only with reputable sellers that you've checked out in advance.

Identity Theft

In this case, a scammer doesn't care about buying your car. Instead, they're interested in stealing your identity. They do this by requesting personal information such as bank account numbers, Social Security numbers or car maintenance records. Be careful about supplying this type of personal data to anybody who says they'd like to purchase your car or accept a trade-in. Before you hand over car maintenance records, make copies and black out any personal information.

Fake Escrows

In this scam, a fraudster poses as a buyer and uses a fake escrow service to hold the money for a car purchase. After the seller turns over the car title, they quickly find out that the escrow money can't be withdrawn. To prevent being scammed like this, pick a reputable escrow service that you want to use.

Payment Plans

A scammer may try to steal money by posing as a buyer and proposing car payments be made over time. The "buyer" may take possession of the car and make an initial payment or two, but then stop. When you're the seller, your options for getting the rest of your money are limited. Don't ever agree to a payment plan when you're selling a car.

Personal Checks or Cashier's Checks

Be careful about accepting a personal check or cashier's check as payment for a car. If you've turned over the title to your car before the check clears, you may end up learning too late that the check is fake. Before you sign over the title, contact the financial institution that issued the check to make sure it's legitimate.

What to Do if You Are a Victim of an Auto Scam

If you've been victimized by an online car-buying or car-selling scam, consider taking these six steps:

1. Contact your state attorney general's office and your local Better Business Bureau.
2. File a complaint with the FBI's Internet Crime Complaint Center and the National Consumer League's fraud center.
3. Report the fraud to the Federal Trade Commission.
4. If the fraud involved a wire transfer, reach out to the company or financial institution that handled the transfer.
5. If you provided personal information to a scammer, think about changing relevant usernames or passwords.
6. Be sure to monitor your credit reports for any suspicious activity tied to identity theft.

The Bottom Line

Whether you're buying a car online or at a dealership, having good credit can help you obtain great terms on your auto loan. Your credit reports from all three consumer credit bureaus are available through AnnualCreditReport.com. And you can get your free Experian credit report and review your FICO^® Score^?  for free to see where your credit stands. If possible, take the time to improve your credit before applying for a loan to potentially save a lot in interest charges.

?Credit score calculated based on FICO^® Score 8 model. Your lender or insurer may use a different FICO^® Score than FICO^® Score 8, or another type of credit score altogether. Learn more.

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