September 24, 2020 — 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 particularly high demand for recreational vehicles (RVs). Many online platforms list cars, trucks, vans and RVs for very low prices, with sellers offering to make third-party delivery arrangements if the buyer pays via escrow. In reality, neither the automobile nor the escrow company exists — leaving the buyer without their money or their vehicle.
An in-depth investigative study by Better Business Bureau (BBB) finds that thousands of consumers have fallen victim to this scam, 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 at BBB.org/fakevehicles.
According to the study, websites such as Craigslist are rife with advertisements for low-price vehicles, with seemingly eager sellers often claiming that the reduced price is because of an upcoming military deployment overseas, a divorce, or the death of a family member 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 vehicle 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 Jim Hegarty, president and CEO of the BBB serving Nebraska, South Dakota, The Kansas Plains and Southwest Iowa. “Consumers should use extreme caution so they do not let a low price and a sad story lure them into paying for a vehicle that does not exist.”
Hegarty added, “In June, our BBB alerted consumers about three different car scam operations supposedly located in our BBB’s service area. One was not at either of two addresses listed on its website; a second used the name of a real local car dealer that does not sell cars online; and a third did not exist at the listed address and was not licensed to do business.”
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.
Available data suggests that fake online vehicle sales are increasing, but the scope of this fraud 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.
Maria lives in South Dakota. Her car had broken down, and she needed transportation to doctor appointments. A post popped up on Facebook of a nice-looking GMC pickup truck offered for $800. She emailed the “owner,” Diana Blake, who said she lived on the East Coast. She claimed that the truck was in great shape, ran well and had always been kept in a garage. Diana said her husband had died, so she had to move in with her parents and needed to sell the truck.
Diana told Maria that she chose to sell with eBay because it protects people from being scammed. Maria got a fake invoice from “eBay” saying that if she did not like the truck after
delivery, eBay would pay for return shipping. The invoice required that Maria buy four $200 eBay gift cards to complete the purchase. She thought that requesting gift cards was suspicious, but did buy two $200 gift cards.
Then Maria decided to do some research and quickly realized she was involved in a scam. She called eBay, and they confirmed it was a scam and asked her to file a report at spoof@ ebay.com.
Maria returned the gift cards and is glad she didn’t lose her money. She says, “Anyone asked to buy gift cards as a form of payment should realize it’s a scam and should stay away from it!”
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 key 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 BBB if you lost money or report a scam online to https://www.bbb.org/scamtracker
Federal Trade Commission (FTC) – file a complaint online at ftccomplaintassistant.gov or call 877-FTC-Help.
FBI Internet Crime Complaint Center (IC3) – file a complaint online at ic3.gov/complaint.
Canadian Anti Fraud Centre – file a report online at antifraudcentre-centreantifraude.ca or call 1-888-495-8501.
The platform where you saw a suspected bad ad such as: Craigslist
Facebook Marketplace – facebook.com/help
eBay – Forward suspicious emails to firstname.lastname@example.org
BBB is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. BBB services to consumers are free. BBB provides objective advice, BBB Business Profiles on more than 5.3 million companies, 11,000 charity reviews, dispute resolution services, alerts and educational information on topics affecting marketplace trust. Visit BBB.org for more information.