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Auto Industry Leaders Expose Latest Fraud in Online Used Car Marketplace

VENICE, Calif.--F.A.I.R. (Fraud Abatement through Industry Response) announced today the initial findings from its first summit, which took place at the Petersen Automotive Museum in Los Angeles.

This first conference of its kind brought into focus a variety of fraud and scams affecting consumers who shop for used vehicles online. Although these scams are not perpetrated on all online automotive sites, it is still a serious and growing problem. Despite these challenges, the panelists concluded that the Internet remains the safest place for consumers to buy a used car. An educated car shopper has the ability to take advantage of a broad variety of industry services, checklists and tools to ensure a safe and honest transaction.

“The Internet is now the most logical place for an informed consumer to buy and sell a used car,” stated moderator and industry veteran, Charlie Vogelheim. “With best practices, automotive industry leaders continue to help consumers leverage the web’s wide selection, abundant information and interactivity to safely and easily find great values in the private party automotive market”.

During the summit, F.A.I.R. isolated emerging types of used car fraud and scams hitting the marketplace today and suggested means of preventing or avoiding each type of risk including:

  • Overseas Confidence Scams: Originating in Eastern Europe, Russia and Africa, these often involve ‘phantom vehicles’ that do not exist or cars that are offered for sale elsewhere on the Internet by legitimate sellers.
    • F.A.I.R. Recommendation: AutoTrader.com and Cars.com recommended that prospective buyers insist on establishing voice contact with the seller. Perpetrators of this type of fraud often avoid direct contact and will abandon the transaction when pressed for a direct local phone number.
  • WMDs (Wrong & Misleading Descriptions): The traditional online used car market has sometimes been affected by sellers providing inaccurate descriptions used to intentionally mislead buyers.
    • F.A.I.R. Recommendation: As a best practice, buyers should have a vehicle’s condition validated by an independent third-party professional, which can potentially save money on unforeseen repairs. Next month, PepBoys will announce a new web-based inspection request and viewing system to assist used car buyers through technology provided by Mota Motors.
  • Odometer Rollbacks: CARFAX reported a 57 percent increase in this type of fraud over the last two years attributed directly to the popularity of vehicle leasing and the associated mileage penalties in returning a vehicle. Not only does this type of deception affect the value of the vehicle, but it places future owners at physical risk due to neglected scheduled service and maintenance.
    • F.A.I.R. Recommendation: By obtaining a vehicle history report, consumers are able to see the accumulation of mileage over time and quickly determine if there are any potential anomalies.
  • VIN Cloning: Essentially identity theft for vehicles, this ruse involves replacing the vehicle identification number (VIN) on a stolen vehicle with a VIN copied from a similar vehicle located elsewhere.
    • F.A.I.R. Recommendation: Prospective buyers are encouraged to obtain a vehicle history report which will often show the same VIN number registered in different jurisdictions at the same time.

  • Black Market Airbag Fraud: This emerging scam involves removing expensive airbags in modern vehicles and replacing them with faulty ones, or even omitting the airbags entirely. This is potentially the most dangerous risk to consumers as the Department of Transportation (D.O.T.) indicates in a recent study that up to 40 percent of automotive fatalities are the result of a faulty airbag.
    • F.A.I.R. Recommendation: When buying a used car, consumers should obtain a professional independent inspection which can confirm the airbags are installed and in good-working order.

“Con artists are constantly looking for new and more sophisticated ways to scam consumers,” says Larry Gamache, communications director for CARFAX. “We all have to do our part to stay vigilant, thwart these efforts and protect the millions of consumers and thousands of private sellers who buy and sell used cars. It’s a never ending battle in which we all play an important part.”

“We are excited that F.A.I.R. has brought together the best and the brightest in the online automotive industry,” said Reza Bundy, CEO of Mota.com. “By shining a light in the darkest corners of the used car market, we can expose the fraud and together provide comprehensive solutions to ensure the Internet remains the smartest and safest place to buy a used car.”The next F.A.I.R. meeting will take place in Washington, D.C. and held in conjunction with leading law enforcement officials at the state and federal levels. F.A.I.R. also intends to establish protocols that provide an avenue to share information between organizations to further fraud prevention and continue efforts to bring trust and safety to the online used car marketplace.