BBB Serving Northern Colorado and Wyoming has received numerous inquiries and reports from consumers across the country regarding vehicle shipping and escrow fraud – a type of scam that has become extremely common in today’s market.
Consumers report finding a used vehicle listed for sale on an online platform such as Facebook Marketplace or Craigslist. The ad includes alluring images and a tempting price tag. Once contact is made, the seller offers to have a third party hold the purchase money in escrow and then ship the vehicle to the consumer. They agree to the terms and the buyer transfers money to the escrow company as instructed. Then begins the long wait for the buyer – and the realization that he has been duped.
The whole scheme is a fraud. The vehicle does not exist, the seller is a con artist, the escrow company is fake, and the buyer will likely never get their money back.
While it is certainly not a new scam, research from the BBB nationwide suggests that it has become an increasingly common and costly problem during the COVID-19 pandemic. One factor that can drive this increase is the ubiquity of online shopping. Consumers are turning to the Internet for all kinds of consumer goods, including major purchases. Social distancing mandates and preferences have also given crooks a built-in excuse for not being able to show vehicles in person.
It’s important to note that scammers don’t just post bogus ads for cars. BBB has received reports of victims attempting to purchase recreational vehicles, motorcycles, boats, construction equipment, ATVs and other motor vehicles.
While crooks may change their tactics, watch for these common red flags when searching for a vehicle online:
- Price significantly lower than market value
- Seller claims to be in the military and deployed overseas, going through divorce, or having lost a spouse or dependent who owned the car
- The seller will not meet you or allow you to inspect the vehicle in person
- The seller insists that the money be sent to a third party supposed to be recommended by the seller
- The seller requests payment by gift card or bank transfer
BBB recommends the following tips to avoid losing money to this scam:
- Do not pay by bank transfer. Scammers usually avoid payments by check, credit card, or other traceable methods. Pay by credit card whenever possible in case you need to dispute the payment.
- Use a domain registration website (such as https://www.whois.com/) to find out how long the site has been in existence and if other contact information is available. Scammers posing as vehicle dealers, brokers, or large vehicle shipping services often direct consumers to sophisticated websites to complete the transaction.
- Avoid any carrier or broker who does not display their MC file number prominently on their website. Shipping companies are required to register with the Federal Motor Carrier Safety Administration of the United States Department of Transportation and have and display a United States DOT (MC Docket) motor carrier number to operate in the United States. . The company should post the number on its website and provide it over the phone if asked. Check the company at SAFER from the Ministry of Transport website.
- Do not be fooled by photos as they can be easily copied from the internet. Perform a reverse image search to see if a photo has been hijacked from another website. If possible, insist on meeting the seller and inspecting the vehicle before releasing any money.
- Check the book value of the vehicle with legitimate valuation tools. Scammers often entice buyers with prices that are a fraction of the vehicle’s book price so that buyers act quickly. Offers that sound too good to be true usually are.
- Check out BBB.org to see a company’s business profile, if it has one, and also be sure to check out BBB Scam Tracker which can provide additional information.
- Find the contact details listed on the company’s website. If an address is provided, a Google Maps search can show if the location appears to be valid. If a phone number is listed, make a quick call to determine if it’s a working or even company-affiliated number.
ABOUT BBB: For over 100 years, the Better Business Bureau has helped people find businesses, brands, and charities they can trust. In 2018, people turned to BBB over 172 million times for BBB company profiles on nearly 5.4 million companies and charity reports on 11,000 charities, all available for free at bbb.org. There are local and independent BBBs in the United States, Canada, and Mexico, including BBB Serving Northern Colorado and Wyoming, which was founded in 1983 and serves 38 counties in Colorado and Wyoming.