The Tennessee Department of Commerce & Insurance is warning consumers about a recent uptick in auto scams involving unsuspecting consumers who agree to sell their vehicles to purported buyers via Facebook Marketplace – only to then lose their autos to the scammers and get nothing but headaches in return.
To help raise awareness of the proliferation of this (and other) auto scams, TDCI is sharing this consumer warning and alerting the Tennessee Motor Vehicle Commission, the Tennessee Department of Revenue, the Tennessee Attorney General’s Office Consumer Affairs Division, and the Tennessee Department of Financial Institutions.
The Scam
Individuals attempting to sell a vehicle on Facebook Marketplace are first contacted by someone claiming to want to buy the automobile. A price is agreed upon. In some instances, the seller and the buyer might even contact the seller’s bank about the proposed sale.
Then the unscrupulous buyer (either through a phony wire transfer or a fake cashier’s check) appears to provide the funds to the seller in order to complete the sale. (In one instance, a bank was contacted and the scammer provided a fake check.)
With the worthless money in hand and believing that the deal is done, the unsuspecting seller then gives the vehicle to the buyer (who might actually meet the seller in person). Days later, the seller realizes that the sale is cancelled either because the cashier’s check bounces or the wire funds were rescinded by the seller.
To make matters worse, the seller then learns that most insurance companies will not cover an auto theft that occurs via fraud.
“Most auto insurance policies have an anti-fraud provision that makes the auto owner ineligible for theft coverage if someone willingly gives their keys to another individual,” said TDCI Commissioner Carter Lawrence. "We stress to all consumers that they first read their insurance policies in order to better understand what is and – as equally important – what is not covered.”
Consumer Protection Tips
Remember:
- If you’re receiving a cashier’s check, call the bank and verify the cashier’s check is actually valid. If you offer to meet someone at their bank so they can write a check on site and they agree, there’s a good chance this is a legitimate buyer. If they give any reason for not doing that, be wary. Alternatively, meet at the buyer’s bank and have the bank verify in person.
- Selling via a wire transfer is trickier. The ideal solution is to wait 2 business days after the wire is received to ensure the funds are indeed transferred and received. If this is not possible, have the wire sent to the seller’s bank account, then the seller can pay off the auto loan or verify themselves the funds are actually in their account prior to surrendering the vehicle. You should release the vehicle only after the payment is verified and the money clears.
- Check the car’s real history. Run both a National Motor Vehicle Title Information System (NMVTIS) and CARFAX report. NMVTIS shows the true state and title number on record. Consumers can run an NMVTIS report through an approved provider. If a seller claims the car has an out-of-state , but NMVTIS shows Tennessee or shows no history that title is likely fake.
- The Tennessee Motor Vehicle Commission always recommends that individuals purchase motor vehicles from a licensed motor vehicle dealer or salesperson. Consumers can verify the status of a licenseat Verify.
- To report deceptive business practices, file a complaint with the Attorney General’s Division of Consumer Affairs at www.tn.gov/consumer.
- If the buyer’s story, title, or the vehicle history doesn’t match or the deal seems too good to be true, trust your instincts. Walk away if anything feels off.
Slow Your Roll & Ask Questions
In addition to the fake check/wire transfer scheme, consumers should be on the lookout for other online auto sale scams, including:
- VIN swapping (Changing a stolen vehicle’s VIN with a VIN stolen from a legitimate vehicle).
- Selling overdue rental vehicles to unsuspecting consumers;
- Using fraudulent titles to clear a registered lien;
- Odometer fraud;
- Selling totaled/salvage vehicles with clean titles (some via insurance company letters).
While all these schemes are different, none of these scams can be successful without short timeframes and trusting consumers. By slowing down, adding more time before you make a decision, asking to meet in person as well as additional verification about who you’re dealing with, consumers can hopefully avoid falling prey to a scammer.