BBB warns of potential scams on repossessed cars

Published 9:20 am Thursday, July 8, 2010

The Better Business Bureau of Minnesota and North Dakota is warning car shoppers to beware of websites offering too-good-to-be-true deals on repossessed cars. The BBB has heard from people across the country who thought they were buying from a reputable dealer online but were actually sending money to scammers posing as legitimate, already-established community dealerships.

“Because scammers essentially steal the identity and good name of real auto dealers, car shoppers will think that they’re buying a car from a reputable business,” said Dana Badgerow, president and CEO of the BBB of Minnesota and North Dakota. “The truth is, they’re being sold a bill of goods by coordinated, agile scammers who are in all likelihood operating from overseas.”

Recently, a Memphis auto dealer, America Auto Sales,, received more than 1,000 calls from consumers across the country who had shopped for a new car on thinking that it was the website of the Memphis dealership. The phony website used the name, address and contact information of the real dealer.

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The fraudulent website claimed to sell repossessed cars at prices well below market. Buyers were instructed to wire a deposit — as much as $5,000 — to a person rather than the company, which, according to the phony website, “helps us avoid taxes legally.” The balance was to be paid upon delivery at the consumer’s address within five days.

After paying the deposit, victims called the real dealership to arrange delivery of their car. Some customers even showed up at the lot to pick up the cars they had “bought” on the bogus site.

Similar websites have posed as many different dealers in Colorado, Florida, Georgia, Michigan, New Mexico and Texas. The websites are often taken down after a few days only to crop up shortly thereafter under a different web address and under the auspices of another legitimate dealer.

The BBB recommends that car shoppers look for the following red flags when shopping for a car online:

Prices that are too good to be true.

The dealer only communicates through chat or e-mail-never by phone.

The dealer only accepts payment by money wire transfer.

If you have been the victim of a fraudulent auto dealer online, notify your BBB at and the Internet Crime Center at to file a complaint.

The mission of the Better Business Bureau is to promote, through self-regulation, the highest standards of business ethics and conduct; and to instill public confidence in responsible businesses through programs of education and action that inform, protect and assist the general public. Hours of operation are 8 a.m. to 5 p.m. Monday through Friday. Contact the BBB at or 651-699-1111, toll-free at 800-646-6222.