Fake Vehicle Escrow Service Scam
How This Scam Works
This is not a car dealer scam; it is a huge epidemic of related scams that has been infecting sites such as eBay, Craigslist and every classified ad web site large or small for many years. We here at CarBuyingTips.com have been fighting this fraud for years, and have developed tips to help you avoid it. Sometimes the scammers will steal images from a car dealer and post phony vehicle listings online posing as the car dealer they stole the images from. But mostly, these internet scams appear online as a private seller of a used car.
They place their bogus ads on Yahoo Motors, Craigslist and eBay with super low asking prices to reel you in. Every site on the internet that displays classified ads has been hit. The scam begins with you shopping for a used car online. You find a nice used car that you like and the selling price is much lower than other listings for your same car. So you strike up a dialog with the seller and ask a few questions.
The seller replies with a "Dear Sir" form letter. They rarely use your name when responding to you, it's all scripted. It usually has poor grammar and plenty of spelling mistakes. The seller claims to be momentarily out of the country in Europe. We have often seen where the seller claims to be in the military, being deployed and cannot keep the car, so they are forced to sell at a loss. This is what reels in the victims. Now that they are conversing with you via email, they have cleverly led you outside the eBay safe harbor, or whatever site you are using.
The seller wants you to use a particular 3rd party escrow site, "he's used them many times already." What you don't know is that they just created the bogus escrow web site only a couple of days ago. One of the biggest red flags is when they offer to pay the shipping charges! Do you know how much it costs to ship a car across the U.S.? It's usually about $900 and no seller would ever agree to pay that for you.
The phony seller has setup that fake escrow web site that actually looks much better than most bank web sites and is about to steal your money. They convince you to register on the escrow site and you soon receive payment instructions to transfer funds via Western Union or MoneyGram. Unfortunately, you never see your money again and you never get the car. In fact, there never really was a car. There is no "undo" button on Western Union transactions. Once your cash is wired, the scammers can send in their mules to pick up your cash anywhere in the world in minutes, usually in Europe.
There are many variations of this escrow scam. They often tell you to use the escrow service from Yahoo! Motors, eBay payment agents or Square Trade. In reality none of these provide escrow services or collect money for car transactions. You then receive more official looking fraudulent emails that appear to be from Yahoo!, Square Trade, eBay or others. The emails come complete with logos and instructions on how to pay their "payment agents" via Western Union. The scammers all have the same goal in mind, to trick you into thinking that you are sending in thousands of dollars to a trusted escrow company.
This scam is so widespread and easy to find that we here at CarBuyingTips.com have shut down over 600 fake escrow web sites. We accomplished this by working with web hosting companies, police agencies, eBay and the actual victims themselves. Now that we have shown you what to look for, they become very easy to spot. We have often seen a single ad net over a dozen victims, earning the scammers over $50,000 for a week's work. That's why these ads are everywhere, because it is easy money.
How to Avoid the "Fake Escrow" Scam
Never ever use any cash wiring services such as Western Union, MoneyGram or E-gold to pay for any online purchase. These services are only to be used to send money to someone you know and love; and nobody else. Craigslist actually warns you on every single listing on their site to "Avoid scams, deal locally." They specifically tell you not to wire funds, but do people listen? No, too many folks are sucked into the vortex by the low selling price. It's amazing how many intelligent people let their guard down and common sense go by the wayside.
You can avoid this scam by avoiding any deals with escrow altogether. Also, report the ad to the classified site to get it shut down. On Craigslist, you simply flag the ad as prohibited or spam. Another good way to root out the crooked seller is ask them, "when can I see the car." They always lie and say, "I am out of the country and you can't see it." Their ridiculous stories hold very little water and you can poke holes through their nonsense all day long.
Bonus Tip: Before buying any car that you see online, do a search for the VIN. See how many times the same car has appeared for sale by other scammers!
We have a whole checklist of red flags for you to look for so read our Investigative Report: Consumer Guide To Avoiding Internet, Check, Auto Fraud and Nigerian Scams.