When was the last time you spent Sunday morning reading the classified section of your newspaper looking for a car to buy?
Been a while? Yeah, me too.
The Internet has pretty much replaced newspapers as the central marketplace for used cars. That is understandable, as the Internet allows easy access to buyers and sellers all over the world with a few clicks of the mouse.
But the electronic pipeline also provides equally easy access to scam artists of every nature.
Philip Kossoy gave this story idea to “Legal Files” while I was working on the purchase of his Jaguar E-type. Kossoy buys and sells a lot of collector cars, and he’s had enough experiences with Internet scam artists that he thinks he can sniff them out pretty quickly.
Too cheap to be true
Kossoy’s first scam experience came when he ran across a beautiful 1969 Dodge Charger that was listed for sale on a website at $32,500.
The purported seller was a company that builds custom cars. The Charger looked too good to pass up at that price, so Kossoy made the call.
He was immediately suspicious when a woman with a pronounced Russian accent answered the call. She insisted the price was correct, confirmed that the car was in the same condition as pictured, and explained that a wire was the only form of acceptable payment.
After promising to get back to her, Kossoy did a little searching and located the actual website of the company that was identified as the seller. The same car, with the same pictures, was shown on their website at an asking price in excess of $100,000.
Obviously, the scammers had simply cut and pasted the photos and ad copy into their own listing and tried to score some easy cash.
More cloned listings
Another time, Kossoy found a 1970 Mach 1 Mustang listed at an asking price of $26,000. He called and spoke to the seller, who had just inherited the car from his father. It all sounded legitimate, so he bought the car.
After receiving the car, he found another Internet listing for the same car, with the same exact photos, at an asking price of $9,500. He couldn’t resist calling, and got some song and dance about how the seller was out of the country, couldn’t get back in order to ship the car so it would have to be picked up, and was willing to take $9,500 just to get rid of it. The conversation morphed into the “seller” asking Kossoy for his bank information to facilitate the transaction.
That was the goal all along — get bank information from people so their cash could be raided.
“You have to be careful with the secondary Internet websites,” Kossoy said. “You don’t see much of this on the major ones, but any time you see a listing at a way-too-good-to-be-true price, it’s very likely a scam.”
More than just cars
Just when I thought Kossoy was running out of stories, he added, “And it’s not just cars.”
He lists his beach house rental on the Internet. A tenant told him she had rented his beach house on a fake site and lost her money. She found Kossoy’s listing and booked it — in effect paying double for her stay.
And last, but perhaps not least, Kossoy once put out an ad looking for someone to transport one of his cars. He got a quick phone call from “the nicest guy in the world,” who said he was an hour away but needed to sleep and couldn’t get the car until the morning.
He asked for a partial payment on a credit card, and Kossoy obliged him. The car didn’t get picked up, but Kossoy later learned there were several thousands of dollars of fraudulent charges on his credit card.
Kossoy has seen a lot — but not everything.
There are many scams involving cashier’s checks. One that gained some notoriety was a ring that would buy cars and pay for them with a cashier’s check. The seller would be comfortable with the form of payment, and give the “buyer” the car and the title.
By the time the seller learned that the cashier’s check was fake, the car had already been retitled and sent out of state — or even exported out of the country and resold.
One might be surprised that a cashier’s check can be faked, but have you bought one lately? The bank teller is extremely careful to check all the right boxes, and the manager reviews and approves the transaction. Then the file is sent to the printer to print the check. There’s no special paper, no special ink, no special anything. How hard could that be to fake?
And it’s not just normal people who get conned; there’s a huge cashier’s check scam that targets lawyers. The crook masquerades as a business and hires the attorney to collect a debt owed by another business, although for business that have debt, they can learn how to get out of debt easily online.
The lawyer sends a strongly worded demand letter, and a response from the “debtor” comes quickly. “Okay, you’ve got me. I owe the money and I don’t want to spend a fortune in court. Here’s a cashier’s check made payable to you for the full amount owed.” The lawyer, impressed with his or her skill, deposits the check in the law firm’s clients’ trust account.
The “client” directs the lawyer to retain a $5,000 well-earned fee and remit the rest back to the client by wire. After the wire is sent and received, the law firm learns that the check was fake — and that the clients’ trust account needs to be immediately replenished.
This scam has become so popular that lawyers who fall for it are subject to discipline for not safeguarding their clients’ funds.
Cashier’s checks are so easy to fake, especially when they are drawn on distant or obscure banks, that our firm insists on allowing at least a week for them to clear before we are willing to disburse funds following a deposit.
And, just to be safe, we check with the banks to confirm that the check has cleared. We often check with the issuing bank to confirm authenticity before even depositing the check.
Wiring funds is the current preferred choice. Generally, your bank won’t confirm the deposit until it has actually verified the actual funds, and the sender can’t recall the wire. The wire is a bank-to-bank transfer that makes it solid.
But wires aren’t foolproof.
Recently, a story circulated about a real estate closing gone awry. The title company closing the transaction sent an email to the buyers and their broker with instructions as to where to wire the purchase price. After wiring about $325,000, the buyer learned that someone had hacked someone’s email account and created a false email from the title company. It looked totally legitimate, except it substituted the thief’s wiring information for that of the title company.
It’s really hard to offer foolproof advice about how to avoid getting scammed, but there are some common-sense things one can do.
If you’re buying a car long distance, beware of prices that are too good to be true. They usually aren’t. The seller always has some sort of possibly believable story about why he or she just wants to make a quick and easy sale, but let’s be serious here. It’s a big world — can you really be the first one to see this ad?
There really aren’t very many angry women selling $2,000 Porsche 911s because their husband ran off with his girlfriend and said to sell the 911 for as much as she could get.
But a normal market price isn’t enough to lower your guard. Don’t send money to the buyer until you have verified the existence of the car and the legitimacy of its title. And do whatever you can to check out the buyer.
If you’re selling your car, be careful about the mode of payment. Avoid giving out your bank information until you are sure you are dealing with a legitimate buyer. If you are going to take a cashier’s check, call the issuing bank to verify it, and take the check to your bank for deposit before releasing the car or the title.
In all these situations, it is best for both parties to use a knowledgeable intermediary to handle the transaction, usually an attorney.
When our firm serves as the intermediary, we have the buyer wire funds into our clients’ trust account. We have the seller send us the properly endorsed original title, which we review for legitimacy.
We also strongly recommend that an agent for the buyer inspect the car. That not only avoids nasty condition surprises, but also verifies the existence of the car. When everything is in order, we wire funds to the seller, release the title to the buyer, and inform the parties about the release of the car.
All this adds some cost to the transaction, but it gives both parties the peace of mind that their funds or car aren’t going to some scam artist in some foreign country. ♦
JOHN DRANEAS is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.