This study reveals a growing scam using fake cars and escrow companies to steal from unsuspecting consumers.
Millions of dollars lost to nonesistent cars and other behicles sold online
Nearly every day, Better Business Bureau (BBB) hears from people across the U.S. and Canada who find a car or other vehicle online, agree to buy it, send thousands of dollars to someone they don’t know and then wait. No vehicle ever arrives. The car doesn’t exist or was advertised elsewhere months or years ago. Scammers simply post pictures and descriptions of cars used in other ads, and then ask interested buyers to wire money to supposed third-party escrow businesses operated by the scammers. It is nearly impossible to get money back.
Hallmarks of vehicle escrow scam:
• The price of the vehicle for sale is almost always far below market value.
• To justify selling the car quickly at a low price, the bogus seller may claim to be deploying overseas, going through a divorce or suffering the loss of a husband or son who owned the car, which brings painful memories.
• Sellers never meet buyers in person nor allow the buyer to see the actual vehicle.
• Bogus sellers claim it is safe for interested buyers to send money. They assert that the transaction is protected by eBay Motors or an independent third party shipping company that will hold the funds in escrow until the buyer receives and approves the vehicle. In reality, eBay’s protections only apply to items where the transaction is all on its platform. Crooks regularly use eBay’s name, even sending fake invoices with the company’s letterhead or sending emails that appear to be from the company.
BBB has been active in identifying, investigating and warning consumers about fake shipping and escrow companies, which claim to be located in many towns across the U.S. and Canada.
Investigations suggest these scams are operated by Romanian organized crime gangs. Criminal authorities in both the U.S. and Europe have arrested dozens of the scammers, responsible for millions of dollars in losses, but this scam continues to operate.
This study explores the scope of this scam, who it affects, the elements of the fraud, the role BBB plays in combating it, and major law enforcement actions to fight it.
Who are the scammers?
Though other criminal gangs may be engaged in this fraud, almost all of those prosecuted in the U.S. and Europe are Romanians, though knowledgeable sources at AA419 and petscam.com tell BBB that there are other fraudsters in Cameroon engaged in similar scams.
Why Romania? An article in Wired Magazine examines how cyber fraud developed in that country following the end of communist rule. It seems to have developed early on in the town of Valcea. Soon people began making money by selling goods online that they did not really have. As the scams succeeded, the threat quickly grew with gang members located across Europe, the U.S. and Canada. Law enforcement has recognized that this is organized crime. Different groups or cells provide specialized roles to make the scams work. Some post fake advertisements while others create fake websites. Some handle telephone calls or other communications with victims. One group may forge fake passports and other legal documents used for opening bank accounts. Still others may recruit money mules to receive the funds from victims. And some launder the money, making it difficult to trace back to the fraudsters.
The U.S. Embassy in Romania posted a warning about fraud emanating from that country, stating:
"Economic crime is a growing problem in Romania. Due to the high level of computer skills in this country, cybercrimes [including internet fraud, credit card fraud, auction site fraud, and hacking/extortion schemes] are occurring on an increasing basis. American companies and citizens are very often the victims of this type of crime... It is important that you save any emails or documents that were generated as a result of the fraud. You should also notify the relevant credit card companies forthwith, and make immediate efforts to retrieve your goods or funds if they have not yet been delivered."
Another group that engages in offering nonexistent vehicles online are scammers centered in Cameroon, an African country that shares a border with Nigeria. These scammers are widely involved in selling fictitious puppies and other pets online, the subject of an earlier BBB study. Both petscams.com, which helps victims with that scam, and Artists Against 419 (AA419), a group of volunteers that track the activities of scammers, confirm that the same groups engage in car scams. A website called scam.directory collects examples of such frauds.
How to recognize a car scam
Several elements come together to create a convincing, elaborate con with different scammer cells playing a variety of roles.
Online advertisements: car scammers lure prospective buyers with ads in high-traffic, online classified ads. These include:
Craigslist
Craigslist is one of the primary places where fake ads are placed. Craigslist is free and relatively easy to use. Those who want to post an ad simply go to the site for their area and open a free account. One simply has to enter a description of the vehicle, the price, upload a few photos and provide contact information. Craigslist is organized by city or region, allowing users to concentrate on a local area. But anyone can create an account, and they don’t need to live in the city where the unit is advertised. It offers safety tips for those on its site.
Though not widely known, it is possible to search all of Craigslist. Sites that allow this include searchcraigslist. org. People can do a search for an interesting or unusual term used in the description of a vehicle or even search for the picture of the car. If the same car is advertised in many different locations, you can be sure it is a scam.
Kijiji
Kijiji is a similar online classified marketplace operating in Canada. Kijiji told BBB that bogus car sales are one of the major types of frauds they see, and they constantly work to keep fraud off of its platform. As with Craigslist, those posting items have to have an online account, and Kijiji tries to keep scammers from opening accounts through the use of algorithms and filters. If ads are in a high risk category (like cars) they may delay posting them until they can look at them more closely. Of the 1.3 or 1.4 million new posts they see every week, they delay about 10,000 posts, but find that only 1% (100) of those are scams. In addition, they take down scam ads that they identify, though they recognize that some scam ads will evade their efforts. Kijiji has warnings about car scams. The company strongly encourages the public to let them know about scam ads.
Facebook Marketplace
Facebook Marketplace also allows users to search for listings in particular areas. Facebook Marketplace told BBB that they proactively view listings for a wide range of scam behavior before they are listed, and when they get reports of scams, they investigate and take action. In addition, each car listing has a drop down box in the upper right hand corner allowing viewers to report it as a scam. Marketplace explains how to report a problematic listing and also offers tips on how to stay safe using its platform.
There may be dozens of other online places where people advertise cars and other vehicles. Autotrader warns users of car scams, as does CycleTrader.com. In addition, BBB has seen scam ads posted in local free shopping papers such as Pennysaver, which may not have the ability to do as much screening to remove ads from crooked entities. Despite screening efforts by eBay Motors, some scammers have managed to post some ads, tricking victims into moving off the eBay platform to pay and complete the transaction.
No matter what type of vehicle is posted for sale, the ads target buyers with too-good-to-be true prices and sad stories.
An explanation for the urgency to sell the vehicle may be given in the ad or later when the prospective buyer contacts the bogus seller. In reports to BBB, consumers cite three different reasons given by the seller who claims:
• To be in the military and is set to soon deploy overseas
• To have been recently divorced and now has a car they do not want
• The car belonged to a husband or child who recently died and it brings back painful memories.
The seller always has an excuse for why they cannot meet the buyer in person or allow them to inspect the car, such as safety concerns related to the pandemic or having the vehicle in sealed storage with the shipper.
Paul lives in West Chicago, Illinois. In May 2018, he saw a 2016 Toyota Tacoma pickup truck with a topper on it advertised for $2,200 on Facebook Marketplace. He was intrigued, and emailed the “seller,” who identified herself as Lacy Kennedy. She said the truck had belonged to her husband, who had died the previous month, and she wanted to get rid of it. She said the truck was being held at a Facebook secure storage site in Nebraska. Paul asked if he could go there and inspect it, but she said that was not possible. She told him that after he paid, it would be put on a flatbed truck and delivered to him in Illinois.
To pay for the truck, the seller told Paul to go to Walmart, buy a Greendot MoneyPak and email her the numbers on the card. Paul’s wife was concerned that this was a scam, so Paul just took a photo of the front of a Visa Gold card at the store and sent that to Lacy, asking when he could expect delivery. She told him that it didn’t go through. At this point, Paul and his wife had done some research online and found scams using the exact same story as that provided by the seller, so they realized this was a scam. Paul called the BBB and filed a complaint so that other people would not be ripped off. They recently found the exact same photo of the truck still advertised for sale online at Facebook Marketplace.
Not just a car scam: it's a motorcycle, boat, farm equiptment, ATV , RV scam.
Although the fake ads most frequently offer cars for sale, there are also a large number of recreational vehicles (RVs) being advertised, likely in response to a surge in demand for RVs during the pandemic. BBB complaints also include motorcycles, golf carts, horse trailers, campers, boats, pontoon boats, jet skis, lawn tractors, skid steers, all-terrain vehicles (ATV’s), and even food trucks offered for sale by scammers. For the sake of simplicity in this study, the term “car” may refer to other types of vehicles as well.
Consumers often tell BBB the vehicle was in such good shape and the price was so low that they ignored red flags and acted quickly out of fear that someone else may beat them to the sale.
Ronald found a 1995 Winnebago Rialta advertsied in a free weekly shopper newspaper in Branson, Missouri, in May 2018. He called the number in the ad and left a message. Two days later he got a text message saying he had to contact the seller's aunt, who could not talk by phone. Leisha Duggar, the "aunt," sent a link with interior pictures of the Winnebago. She claimed that she got the vehicle in a divorce settlement and had relocated to the Ozarks.
She told Ronald that Missouri Auto Shippers in Springfield, Missouri was handling the transaction. She sent him an invoice by email to explain how the escrow transaction would work. She said he could not the RV in person, but the invoice described how Missouri Auto Shippers would hold the money in escrow so Ronald could have seven days to inspect the RV and return it if he wasn't happy. Ronald was surprised that the payment instructions provided a phone number to call, and that the money had to be sent within two hours of getting the instructions.
Ronald went to his bank to send the money. His banker said the same routing and account numbers were listed and the money was going to California, not Springfield. His banker told him this looked like a scam. When Ronald called for wiring instructions, he pointed out that the wire was not going to Springfield as expected and that this was a scam. The "shipper" hung up on him, and Ronald filed a compliant with the BBB.
The escrow and shipping “businesses” described in this study mostly do not exist, though at times scammers impersonate real car dealerships or use the name of one that has gone out of business. When BBB learns of a purported escrow/shipping business supposedly in their area, they investigate. If they find the business does not exist, BBB often creates a Business Profile for these bogus businesses so consumers searching the internet can find out what has been reported to BBB about these scam businesses and may avoid becoming victims of them.
In March 2018, dozens of consumers from across the country began contacting BBB St. Louis about vehicle shippers with websites that listed addresses primarily in nearby Springfield, Missouri. BBB found the addresses were for locations that did not exist or belonged to other businesses. In June 2018, BBB St. Louis issued a warning to consumers and news media about the scam.
BBB investigators followed the vehicle scam activity by sharing reports from consumers and enlisting AA419.
Consumers described nearly identical stories, no matter which vehicle shipping company was involved. Consumers told BBB they found cars, trucks, recreational vehicles, boats, jet skis, semi-trucks and farm equipment at too-good-to- be-true prices ranging from $3,200 to $9,500, primarily on local Craigslist sites, Autotrader and local free print publications.
Potential buyers from across the country said they thought they were dealing with a local seller. But when they reached the seller, usually a woman, by phone, text or email, she told the buyer that the vehicle and paperwork were being stored at a shipping location in Springfield, Missouri, where she said she recently moved to be with family. She usually claimed her husband recently died, and she was selling the vehicle because it brought back painful memories. A few times, she said she was being deployed or going through divorce. She identified herself to consumers with at least 22 names, sometimes borrowing the names of actresses such as Michelle Williams, Glenda Jackson, Shirley Booth and Natalie Wood. The same residential address in Springfield was listed on invoices sent to consumers by the scammer.
Interested buyers were sent an invoice containing a link to the shipper’s website and were instructed to wire money to the shipper’s bank. The bogus shippers told buyers their money would be held safely in escrow while the shipper transported the vehicle to the potential buyer, who would have five days to evaluate the vehicle. If the buyer wasn’t satisfied, the vehicle could be returned to the shipper, with all shipping fees paid by the seller. Potential buyers were given the name of a financial representative and asked to complete a bank-to-bank wire transfer.
Some consumers did not learn that the stories and websites were fake until the vehicles didn’t show up.
Over 12 months, BBB St. Louis identified 30 bogus websites using the same or similar website templates, photos and descriptions. The newly formed websites were primarily registered through internet domain registrar Namecheap in Panama as well as by Cnobin Information Technology Limited. Since 2018, BBB St. Louis received 6779 inquiries about the bogus shipping companies and 78 complaints or negative reviews.
Around the same time consumers began contacting BBB in St. Louis, BBB in Omaha alerted consumers about reports of vehicle scams which used the same stories and website templates as those in Missouri. In the following months, dozens of similar bogus websites popped up online claiming to be located in areas served by BBBs in Minnesota and North Dakota; Nebraska, South Dakota; The Kansas Plains & SW Iowa; Denver/Boulder; Kansas City; San Jose & LA; Detroit & Eastern Michigan; New York; Central & Western MA and Northeastern CT; Northern Colorado and Wyoming; Greater Iowa, Quad Cities, and Siouxland Region; Northwest - Pacific; Chicago & Northern Illinois; Eastern MA, ME, RI & VT; Central Florida; New Hampshire; and Greater Maryland.
Throughout 2020, BBB noted a resurgence in vehicle scam reports and has issued news warnings in Wisconsin, Western Michigan, upstate New York, New York metro, Minnesota and elsewhere. BBB in SE Florida has tracked at least 39 fraudulent companies with 69 victims and losses of $866,000.
In June 2020, BBB Omaha warned consumers about three different car scam operations supposedly located in their area. One was not actually located 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.
Recently, some car scammers have illegally used the BBB Accredited Business Seal on their bogus websites, implying that they were BBB Accredited Businesses. Clicking on the forged seal takes a consumer to a fake BBB Business Profile with fabricated information to make the business look good. BBB actively works to prevent this type of fraud by quickly identifying and shutting down such websites.
Clifton lives and works in San Francisco. In May 2020, he found a 2004 Ford Mustang SVT Cobra for $1,200. This was in his price range, so he sent an email to the seller.
She replied, saying:
“My name is Sylvia, I’m emailing you about 2004 Ford Mustang 2dr Conv SVT Cobra with an gas engine, manual transmission and only 60k miles. Never had or need any paint/body work done, garaged keep always, without any mechanical problems, tires and wheels are in great shape as well, electric is working perfectly. The engine on gas, runs very good and the manual transmission shifts perfectly. Has a clean and clear title in my name and there are no liens or loans on it. This car has been used by my husband who died 4 month ago. The price was reduced to $1,200 because I’m in a hurry to find a buyer. I need to sell it before the end of the month, when I will be leaving on military duty with my medical team out of the country for a year and do not want to store it. Hate to sell it but its not worth keeping insurance and paying storage fees for a year. Also, my daughter have another car so there’s no use on keeping it. If you are interested reply to email. Some details of the car: Some details of the car: Vehicle title - Clean Transmission - Manual Fuel type - Gasoline. I look forward to hearing from you, Sgt. Sylvia Schumacher."
After he agreed to buy the car, he received an emailed invoice from support@vehicleprotection-plan.com that claimed to be from eBay and directed him to buy $1200 in eBay gift cards. He bought cards in amounts of $200-$500 each, took a photo of the numbers on the back and sent them by email as directed. They told him to expect the car in five days on a Sunday.
Criminal law enforcement of car scams
Despite the difficulties of investigating and prosecuting frauds that operate from different countries, there have been significant efforts to battle this scam involving Romanian crime operations in the U.S. and Europe over the last 10 years.
In July 2011, the Justice Department announced a major effort against this fraud. Over 100 people were arrested for selling nonexistent cars, motorcycles and boats online. Victim losses were more than $10 million, much of it sent through Western Union and MoneyGram. Prosecutions occurred in the Eastern District of Pennsylvania, the Eastern District of Missouri, and the Southern District of Florida.
In 2012, federal prosecutors undertook a similar effort, headed up by the U.S. Attorney’s office in Brooklyn, New York. Cars, motorcycles and boats were “sold” for prices ranging from $10,000 to $45,000. They were offered on eBay, Autotrader.com and CycleTrader. com. There were at least $3 million in losses. Thirteen people were indicted, including one from the U.K., one from Canada and another from the Czech Republic. Three people were extradited from Romania. Some members of the group designed and produced counterfeit passports that were then used to open the bank accounts which received money wired by victims.
In September 2013, federal authorities in the Eastern District of Pennsylvania (Philadelphia) announced criminal charges against a Romanian man for his role in selling nonexistent vehicles.
In 2014, police in London arrested two men and did a search of an identity theft factory involving a Romanian car fraud operation. Victims’ money was wired to U.K. bank accounts and then transferred out of the country.
In 2016, Scotland Yard in London arrested three men who were not only selling nonexistent cars online but also operating a rental fraud, collecting money for vacation homes that were not actually available. They also operated a business email compromise fraud. Losses were more than £1 million.
In May 2017, Polish Police and Europol announced nine arrests of a gang advertising and taking payments for cars, construction and agricultural machinery but never delivering them. The group reportedly bought small businesses with a good reputation and used those to add credibility to their scheme.
In May 2018, Europol announced 33 arrests of a Romanian crime ring operating from Spain. Europol reports that the major operation was online car fraud, but the group was also engaged in business email compromise fraud and vacation rental fraud. The group was organized in cells across Europe, and scammed victims out of at least €8 million. Police discovered 700 bank accounts in Spain used in this fraud. They also discovered and busted a location that was counterfeiting documents.
Another major prosecution against organized crime gangs, this one employing the RICO statute, was announced in Kentucky in February 2019, and is ongoing. It was led by the Secret Service and the Kentucky State Police. Twenty people were charged, including 15 Romanians, a Bulgarian, and four Americans. Twelve people were extradited to the U.S.
The group took in multiple millions of dollars. Victim funds were converted to bitcoin, and at least $1.8 million was transferred to Romania and converted to local currency. 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 August 2020 police in Ireland announced Operation Omena. Police say that they have identified 130 people, all from Valcea, Romania, operating in five cells in Ireland. They were offering caravans (campers), tractors, farm machinery, vintage cars and designer watches across Europe – though not in Ireland. Other victims were in Colombia, South Korea, Lebanon, and the U.S.
How to avoid car scams
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.
SCAM ALERT
• Watch for red flags.
· The price is significantly below market for the car.
· You cannot meet the seller or inspect the car in person.
· Money must be sent to a supposed third party recommended by the seller.
· Payment is by gift card or bank to bank wire transfer.
• Do an internet search of the photo of the car, an interesting sentence in the text, the phone number or the email address, to see if there are online complaints tied to those elements.
• Use Whois to tell how long the website for an escrow or shipping company has been active and compare it to how long it claims to have been in operation elsewhere on the website.
• Examine emails or links “from” eBay carefully. There is no eBay protection unless the whole transaction takes place on eBay.
• Never pay for a vehicle through Western Union, MoneyGram, with a gift card or a reloadable card.
• Check a blue book for the real market value of the vehicle.
- Get a vehicle history report, such as Carfax or AutoCheck, on the car.
