I Found This Great Used Car Online! Tips for spotting and avoiding fraud when you buy a car online

If you've never been a victim of fraud, you're lucky!

A Gartner Research study found that approximately 7.5% of Americans lost money in financial fraud scams in 2008, many of them through online fraud. Between phishing attacks (luring users to fake Web sites), fake chat room sessions, and spyware, online consumers are vulnerable - as are online merchants and service providers.

DAS Auto Shippers, a national auto transport company, has identified a used car scam that's run by fraudsters using online sales and auction sites to advertise used cars, trucks, and SUVs at sharply discounted prices. Buyers think they're getting a great deal: "Wow! A used Lexus SUV worth over $12k for just $4800? What a deal!" And that would be a great deal - if the seller actually had a vehicle for sale.

Here's how the scam works.

Buy It and We'll Have It Shipped
First, the scammer lists a car on eBay, Craigslist, Yahoo Motors or another sales/auction site. He provides what seems to be all the information a car buyer could possibly want: VIN, photos, mileage information, etc. The scammer has this information because he's copied it from a previous, legitimate online listing for a vehicle. It's probably a car that sold six months to a year before.

Even with all that information, most buyers are careful. They contact the "seller" and either ask to see the vehicle themselves or have someone inspect it for them.

Of course, the person perpetrating the fraud doesn't have a vehicle to show, so he tells the buyer that Dependable Auto Shippers (DAS) or another auto shipper already has the vehicle crated for shipping. But, the fraudster adds, the buyer shouldn't worry because the vehicle is covered by the DAS (or another company's) Vehicle Protection Program. If the buyer doesn't like the vehicle when it arrives, he gets his money refunded.

Once the buyer agrees to the deal, the fraudulent seller explains that someone from the "Vehicle Protection Program" will contact them to arrange payment. The fake email, which contains payment information and a tracking number, directs the buyer to a bogus Web site that looks legitimate. Scammers often make complete copies of other companies Web sites and host them at different domain names.

Often, the buyer isn't aware he's been scammed until he contacts the auto transport company to ask about delivery dates or request additional information. This fraud scheme is widespread. For instance, DAS Auto Shippers reports receiving three or more calls each week from all over the country. About 1/3 of the people calling have already paid.

Stopping the Scammers Isn't Easy
The scam is extremely difficult to prosecute. The perpetrators are smart enough to keep the vehicle cost below $5,000 because the FBI doesn't investigate and prosecute fraud schemes under that amount. Local law enforcement can't do anything because the fraudsters are usually located in Eastern Europe or Asia.

Often, the auto shipping companies ask the would-be buyers to play along with the scam until the fraudulent seller sends the email with payment information. Using the email information, they go work tracing the IP addresses and tracking down the hosting companies to get the bogus Web sites shut down.

The good news is that everyone works together to combat fraud schemes like this one. Unfortunately, the scammers just keep moving the sites around and defrauding consumers.

How to Recognize an Online Used Car Scam
Although each scammer uses a slightly different sales pitch, there are common warning signs. If the seller uses even one of these techniques, think very carefully before buying:

1. The seller is a soldier deployed overseas or is working overseas. That's why he has to sell the vehicle quickly (and at a loss) and/or why it's crated up and not available for inspection.
2. The vehicle costs less than $5,000 - but not much less. The scammers lure buyers with prices that are a fraction of the vehicle's book price. So they'll offer a $15,000 SUV for just $4900. Deals that seem "too good to be true" usually are.
3. Send your payment to a third party. In an effort to make the transaction seem risk free, the seller tells you that the third party, whether eBay, DAS, or an escrow service, will immediately refund your money if you don't like the vehicle. Understand that legitimate auto transport companies accept payment for transport services only. They don't hold money for third parties or take payment for vehicles.
4. You have to send payment by wire transfer. Scammers don't take payment by personal check, cashier's check, PayPal, credit card, or any other traceable method. Anyone requesting payment by anonymous wire transfer is probably engaged in some sort of fraud.

The best defense against this type of fraud is education. Consumers who are alert to signs of fraud can help get these scams shut down before the perpetrators are able to defraud a lot of people.