An Introduction into Auto Fraud

In a perfect world, people would be unquestionably honest in every aspect of their lives.  There would be no need for things like safes and security, as there would be no threat to a person’s lifestyle or finances.  In a perfect world, there would be no such thing as automotive fraud.  Unfortunately for us all, this is far from a perfect world.  As a result, the safeguarding of one’s assets is an absolute necessity.  While it is a stretch to say the world is inherently dishonest, it is not bold to admit that fraud is a familiar mechanism in the business machine.   The sly but suited methodology involved with duping an uninformed consumer has been considered artistry for most con-men.  The ability to present something faulty as something fair has infected every industry in the world.  The automotive market is no different.

The perpetual public perception of automotive dealers as being silver tongued thieves out to cope a feel on customer’s pockets is but one example of how society views fraud in the automotive world.  While a larger portion of dealers and car salesmen are simply people trying to support a family, there are those who wind their watch to a crooked clock.  The reason behind most sorrow stories involving fraud has to do with basic lack of knowledge on the consumer end.  Not knowing what is standard and what is a scam can lead most buyers down a dangerous path of being misinformed and mistreated.  The first line of defense to avoid such a woeful fate is to know what to look for.

Fraud in terms of automotives generally exists in the pre-owned market.  Yes, buying new from a dealership can still set you up for a contractual robbery, but most automotive fraud happens with used cars sold through dealerships and private sellers.  The reason being is it is much easier to unload a shoddy, busted car that has miles on it than a brand new one.  People buy used and scam artists know this, so they can manipulate the system to make it appear as though they are selling a legitimate steal of a ride, only for the buyer to find out later that what they actually bought was a lemon.  A lemon car is the universal term for a vehicle that is found to be defective only after being sold.  They can be new or used, with the new side usually coming off the production line with defects in the mechanics or a specific part that has either been overlooked or ignored by manufacturers.  If this is the case, these cars will usually be recalled by makers to replace any hazard.  For used lemons, they can be rundown and disguised by the selling party in order to pawn it off on an unsuspecting victim.  They may run fine for a stretch of miles or at a certain speed, but given time and distance will fall apart.  There is much legislation regarding lemon vehicles that protect buyers from dishonest sellers, but pre-owned vehicles are mostly outside the law as it is more of a case of buyer beware.

There are countless other ways one can be tricked into buying a lemon car.  Dishonest dealerships have a bag of methods that play into this.  Replacing the VIN number of a car, failure to disclose the vehicle history and rolling back the odometer are a few of these.  Most of this can be countered by getting a vehicle history report from such providers as CarFax and AutoCheck.com.  These companies will provide anyone with the accident history of any given VIN number.  If the report comes up as salvage and the seller doesn’t mention this, which should be an alarm that the vehicle may be a lemon.

The importance of a test drive is everything.  Knowing what to look for in a test drive is more than kicking tires and starting engines.  Smoke and sound is a huge factor.  It is always recommended that you contact a trusted mechanic in regards to any vehicle you are thinking about purchasing.  They know better than you and having them at your disposal is the same as having a seat belt in a snow storm.  Still, something as simple as asking why the seller is selling the vehicle can set off alarms as well.  Watch and listen to their responses as you rifle through questions about the engine, the history and previous maintenance.  You don’t need to be a detective to tell if someone is trying to hide a crucial defect from you.  All you need is awareness and understanding to turn a potential fraud mistake into a well informed decision.

Check in with us regularly as we bring you more advice regarding automotive fraud prevention.  As always, you can find us at One Stop Motors!

Tyler Baker; OSM Writer

Counterfeit Cashier’s Check Scam

One Stop Motors is passionate against online fraud.  We, as an online advertisement firm ourselves, feel for those who fall victim to the clever tricks and traps of con-men.  In an age dominated by the world wide web, we recognise that online fraud is prominent, even with all the protection in place on the internet.  It will always be our mission to make our clients and readers aware of these scams and fraudulent schemes.  Today, we bring you an example of a common scam not just over the internet, but one that has been in place for decades.

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The Counterfeit Cashier’s Check

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You are selling an item over the Internet – it could be a used car, motor home, or even an airplane.  You should beware of the following:

You receive an email offer to purchase your item and the buyer says he’ll send a bank cashier’s check. The buyer is from Nigeria or “West Africa”, but has a business associate in the United States who will send you the cashier’s check.   Then you are told that for some reason the check was already made out to you for an amount larger than your asking price.  The buyer asks you to please deposit the check, wait for it to clear, and then send him the difference — “but only after the cashier’s check clears, of course.”

You are skeptical – but, sure enough, the bank cashier’s check arrives by Fed Ex, it looks real, your bank accepts the check, and the bank assures you the funds are in fact available. So you wait the time the bank recommends to verify that the check is clear and then you wire the difference to your buyer in Nigeria and prepare to ship your item.

A week later your bank calls: “We’re very sorry, but the cashier’s check was counterfeit” — a superb copy, but worthless. Your account is frozen. You must pay the bank back the entire amount of the cashier’s check. You may even be considered a suspect yourself.

Your “buyer” disappears. About the only good news: sellers rarely get to the point of shipping their items abroad.  That doesn’t matter, now, you’re already paying for it twice.

OneStopMotors

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Common-sense advice for buyers

Buying a car you find online is a lot like buying a car through a classified ad in the newspaper. In either case, use your best judgment.  One Stop Motors recommends these common sense tips and they could help you avoid making a seriously bad purchase.

Know the car’s market value
Be suspicious of a vehicle priced significantly below market value. If it sounds too good to be true, it probably is.

Obtain a vehicle history report
A vehicle history report (Autocheck) can provide useful information, such as who holds the title to the car and whether the car has been in an accident reported to authorities. You’ll also find out whether the car was ever reported stolen, salvaged or damaged.

Inspect the car
Schedule an inspection with a professional mechanic or an inspection service if the car is not in your area. An early inspection can help you identify problems. However, keep in mind that an inspection isn’t a warranty and won’t guarantee a car is free from defects or that inspectors have identified all existing problems.

Confirm contact information
Before you send payment, verify the seller’s street address and phone number-an email address is not enough. ZIP codes, area codes and addresses should match up. Be wary if the seller is located overseas.

Get a detailed receipt
Ask the seller for a receipt that states whether the vehicle is being sold with a warranty or “as is.”

Get title to the vehicle
Make sure you know what’s required in your state to transfer title to the vehicle you’re buying.

Quick common-sense advice for sellers

Selling a car you find online is a lot like selling a car through a classified ad in the newspaper. In either case, use your best judgment.  Here are a few quick seller tips from the experts at One Stop Motors.

Confirm contact information
Be particularly wary of buyers located overseas. Always verify the buyer’s street address and phone number.

Secure payment first
Do not transfer the title until you have payment in hand at the agreed upon price.

Verify that a certified check is genuine
Before you deposit a certified check, verify authenticity with the issuing bank-not just your bank. Make sure the account contains sufficient funds and the issuing bank guarantees payment on the check. It may take a week or more for the check to clear. It hasn’t cleared just because your bank has accepted it and credited your account.

How to protect yourself when selling online

One Stop Motors has this advice if you are selling online; be extremely skeptical of any offers:

• from overseas to a party you do not know
• paid by cashier’s check
• from buyers sending more than the purchase price of the item
• from buyers who seem more worried about payment than the shipment of the item to them
• from buyers who show little or no concern to the condition of the item they are purchasing

Also, a bank may make money “available” to you almost at once if you deposit a purported bank cashier’s check, but that’s NOTa guarantee the check is authentic. It could be returned as counterfeit up to three years later, and the bank will hold you responsible for the money.

Ways to verify a check include:

• Inspect the check carefully to ensure it contains all the legal elements of a check.
• Amount of the check, in figures and words, should match. Often this amount is machine “impressed” on official bank checks.
• Account number should be encoded in MICR ink (should not be shiny in appearance).
• Ensure the drawer’s signature appears on the check; watch for tracing lines, “shaky” writing.  Often facsimile signatures are used on official bank checks, with a second, original signature required for amounts exceeding a designated dollar amount.
• Perforations – checks are generally perforated on at least one side.
• Routing and transit numbers appearing in the MICR line and elsewhere on the check should be consistent.
• Contact the financial institution on which the check is drawn for authentication that the check is valid with no outstanding claims for loss, stolen or destroyed instrument. Verify if the person whose signature appears on the check on behalf of the bank is authorized to sign official checks of the bank.
• IMPORTANT:Independently verify the item to verify its authenticity. Do not rely on information printed on the face of the check, such as phone numbers or name/location of bank, because these numbers will often connect directly to the artists or their associates.
• Find the bank’s telephone number from a reliable source, such as a bank directory, the bank’s web site or directory assistance.
• Verify as much information as possible – check number (is it in normal sequence of other official checks issued by the bank), payee, issue date, amount and authorized signatory. Ask if the bank’s official checks bear any security features, such as watermarks, security threads, background patterns, high-resolution borders, void pantograph, etc.
• If there is any doubt as to the collectibility of the check, do not accept the check for deposit or encashment.  Send the check to the issuing financial institution for collection.  Ask that proceeds be wired directly to the customer’s account.
• As an alternative to sending the item for collection, deposit the check to the customer’s account, and place a Reg. CC exception hold.  Under Reg. CC, the entire amount of non-local checks can be held for up to 11 business days before making the money available for customer’s use, if the bank can evidence “reasonable cause to doubt collectibility.”  In the case of a cashier’s check or other official check of a bank, if the check contains any questionable feature, erasures, alterations, etc., the depositary bank has a “reasonable cause to doubt collectibility.”

Beware of overpayment or other complicated payment schemes

Don’t agree to any plan where the buyer asks to send a check for more than the sale price and requests that the seller refund the difference. And be suspicious of any buyer who proposes making payment through a friend or agent of the buyer.