Vehicle, escrow scams growing as demand increases for online vehicle purchases
Social distancing guidelines during the COVID-19 pandemic have fueled an unprecedented shift to online shopping for consumer goods of all kinds, including vehicles, with exceptionally high demand for recreational vehicles.
Many online platforms list cars, trucks, vans, and RVs for a very affordable price, with sellers offering to make third-party delivery arrangements if the buyer pays via escrow.
Neither the automobile nor the escrow company exists – leaving the buyer without their money or vehicle.
An in-depth investigative study by Better Business Bureau (BBB) finds that thousands of consumers have fallen victim to this fraud, with losses totaling millions of dollars.
The study – Virtual Vehicle Vendor Scams: BBB Study Reveals a Growing Scam Using Fake Cars and Escrow Companies to Steal from Unwitting Consumers – points to heightened risk from this scam as demand increases for online vehicle purchases.
Read the full study here.
According to the study, websites such as Craigslist are rife with advertisements for low-price vehicles. Eager sellers often claim that the reduced price is because of an upcoming military deployment overseas, a divorce, or a family member’s death to whom the vehicle belonged.
Victims are directed to pay a supposedly independent third party, typically by wire transfer, to hold money in escrow and ship the vehicle. However, no car is ever delivered.
“Buying a vehicle online from a reputable seller can be a safe and convenient way to shop during COVID-19, but as with any high-profile situation, scammers are finding ways to take advantage of unwitting buyers,” said Julie Wheeler, president and CEO of BBB Serving Western Virginia. “Consumers should use extreme caution so as not to let a low price and a sad story lure them into paying for a vehicle that does not exist.”
Scammers sometimes claim that the transaction is protected by the eBay vehicle protection program. In other cases, they invent bogus websites connected to shipping escrow companies with addresses in towns across the U.S., particularly the Midwest. Those sometimes use the names and addresses of real businesses or car dealerships.
Data suggests that fake online vehicle sales are increasing, but this fraud’s scope can be difficult to gauge because many law enforcement agencies do not track it as a separate complaint category. The Internet Crime Complaint Center has reported receiving tens of thousands of vehicle escrow scam reports, with losses in the tens of millions.
Criminal cases likewise reflect millions of dollars in losses. BBB receives hundreds of BBB Scam Tracker reports annually about fake vehicle shippers and escrow companies, with 41% of victims reporting they lost money.
A man found a bass fishing boat from Pulaski County, Virginia, listed on Craigslist for sale in April of 2019. The boat was well-below the appraisal value. After calling the number in the ad and leaving a message, the seller texted back an email address to contact the owner.
The “owner” explained she was selling the boat for a low price because she was enlisted in the army and being deployed the following month. The online seller even went as far as providing the Pulaski Virginia Army National Guard address. While communicating with the seller off the Craigslist website, the ad was red-flagged and removed from the platform.
The buyer then received an invoice from eBay Motors with a buyer protection guarantee stating the boat was in a storage facility. He was instructed to buy eBay cards and contact the eBay Motors phone number to provide the card numbers. The seller said the boat would be delivered to his home in Northumberland County, Pa., where he would have five days to inspect his purchase while his payment would be held in escrow on eBay cards until he accepted.
“I researched how the eBay process worked because I always used PayPal, not eBay cards before. I talked to my son-in-law, who has bought vehicles on eBay, but he said that he never used eBay cards.”
The suspicious buyer double-checked the contact information listed on eBay’s website and talked to the fraud department.
“They said that they don’t have storage facilities and don’t deliver.”
Thankfully, no money was sent from the potential buyer.
Other consumers in our service area haven’t been as fortunate. A man from Eagle Rock, Va., found a four-wheeler with a plow listed on Craigslist in March 2016. He received photos and communication through email.
The scammer instructed him to pay $1,900 to eBay Motors using PayPal cards.
BBB Serving Western Virginia has reported losses totaling $5,00 since 2016 to victims within their local service area. Other items for sale gathered from BBB Scam Tracker reports include tractors, golf carts, four-wheelers, and mowers.
Major investigations and prosecutions in New York, Kentucky, and Europe have connected this fraud to Romanian nationals and others living in the U.S., Romania, and elsewhere in Europe. In the most recent U.S. case, the Secret Service and the Kentucky State Police led an organized crime prosecution that charged 20 people, with a reported $1.8 million in victim funds converted to bitcoin and transferred to Romania.
Fifteen defendants have pleaded guilty, three are fugitives, and two others are scheduled to go to trial in fall 2020. Romanian law enforcement provided vital support in the case.
In addition to telling consumers how to recognize and avoid vehicle escrow scams, the report recommends:
- BBB recommends that law enforcement efforts to battle this fraud continue or increase. Coordination and training in this fraud throughout the law enforcement community could prove useful.
- International cooperation between law enforcement agencies should be a priority.
- BBB should continue to share information with law enforcement and educate the public about red flags for this fraud.
- The platforms that scammers use should consider ways they can improve efforts to screen out deceptive ads and educate users on how to avoid them.
Who to contact if you are the victim of a vehicle escrow scam:
- Better Business Bureau– file a complaint with your local BBBif you lost money or report a scam online to BBB Scam Tracker.
- Federal Trade Commission (FTC) – file a complaint online at govor call 877-FTC-Help.
- FBI Internet Crime Complaint Center (IC3)– file a complaint online at gov/complaint.
The platform where you saw a suspected bad ad such as:
- Craigslist –craigslist.org/contact
- Kijiji – kijiji.ca/helpdesk/safety/how-do-i-report-an-ad
- Facebook Marketplace– com/help
- eBay – Forward suspicious emails to firstname.lastname@example.org