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Old Rules Still Apply To Online Car Purchase: Buyer Beware

By Mark Huffman
ConsumerAffairs.com

March 29, 2007

• Online: The Worst Place to Buy a Car • Buying A Car Online Can Be Risky, Feds Warn • eBay Motors Complaints • AutoTrader Complaints • More Car Stuff ...

Buying a car has never been easier, or perhaps more fraught with danger for the consumer. As individuals and dealers turn to the Internet to market vehicles to customers, complaints about online deals gone bad mount.

"I looked on Auto Trader for a car and saw a Honda Accord for $7,000," Chris, of Virginia Beach, Virginia told ConsumerAffairs.com in 2005. "I notified the buyer, who told me he had to relocate due to his job and that was why he was selling the car. He told me to put the money in an Auto Trader escrow account and he wouldn't get it unless I liked the car."

Chris said he sent in the escrow form, along with the money, and never heard from the seller again. The address he was given was the seller's, not the escrow account's. When he looked at the Web site, the phantom car was listed again, with a new price and in a new city.

Michelle Gomez, president of Recoveries Unlimited, isn't surprised by such stories. Even when the sale isn't an outright scam, as it was in Chris' case, she says an online purchase can be a recipe for disappointment.

"If people buy a vehicle on the Internet, 99.9 percent of the time it's not going to be what they expected," she told ConsumerAffairs.com.

Gomez has seen the problems inherent in online vehicle sales firsthand.

Her company is involved in moving vehicles between dealerships and to consumers. She has been in the repossession business and continues to work as a "skip tracer," tracking down people who've taken the money and run.

One of the problems with online vehicle sales is the consumer never really knows who they are dealing with. It's easy for an individual to sell a car they don't own, and even easier to set up their own "virtual" dealership, with photos of a huge inventory and modern showroom.

"There are a lot of dealerships that have called me to move cars for them, and it turns out to be one guy, operating out of his living room, selling a vehicle on eBay," Gomez said.

Rating systems are unreliable too, she adds. In many cases the posts from "happy customers" are nothing but plants.

"The seller is going to write down the five stars. They're going to write what they want you to read, that they are credible, that they are reliable, that they are good," she said.

In addition to AutoTrader.com, dealers and individuals sell vehicles on eBay, which made a name for itself selling small, inexpensive items, and where any losses from fraud tended to be small. That's all changed with the addition of more and more big ticket items like automobiles, but the trend in the industry appears to be movement toward online sales, despite the dangers to consumers.

Recently, online retailer Overstock.com expanded its presence in the car business, reaching agreement with the automotive sales division of Enterprise Rent-A-Car to sell a portion of the company's out-of-service fleet. The company also works with auto dealers nationwide to list new and used vehicles.

"Overstock.com's Cars Program allows car buyers to search for quality vehicles and connect quickly with the dealers offering them," Overstock.com CEO Patrick Byrne said in a statement.

Whether consumers are dealing with a nationally known company or an individual, Gomez says it's wise to be very careful when entering into an online transaction for a car or truck. She's delivered a lot of these vehicles to customers who were not at all happy with what rolled off the truck.

"Some of these cars get pieced up from a chop shop, or they could be flood cars," she said. "I've delivered cars to celebrities who were very upset, and I'm in the middle of handling that transaction and getting that car back to the dealership."

While the Internet provides a fast and convenient way to buy a car, Gomez advises consumers to treat an online purchase they same way they would if they were buying the car from a stranger across town. Get information -- lots of information.

"I would recommend getting the seller's full name, a copy of their driver's license and five to ten references," Gomez said. If everything checks out, then go see the vehicle, take a road test, and have a mechanic look at it. Ask whether the car is road ready and can pass a safety inspection."

That's right. Even if the car is several states away, don't commit to buy it, she says, until you've seen it with your own eyes, looked under the hood, and taken it for a test drive.

While the Internet may be the 21st Century way to buy a car, some things haven't changed -- like never buying a car without kicking the tires first.

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