Online Auto Sales Often Involve Scary Scams

Online auction and classifieds websites are unwittingly participating in car sale scams. Ads gain credibility by appearing on eBay, Craigslist, and other online automobile sales websites, but some are either completely phony or have been copied and pasted from other websites.

The FBI’s Internet Crime Complaint Center received nearly 14,000 complaints from 2008 through 2010, from consumers who have been victimized, or at least targeted, by these auto sale scams. Of the victims who lost money, the total dollar amount is staggering: nearly $44.5 million.

The FBI explains how the scam works:

“Consumers find a vehicle they like—often at a below-market price—on a legitimate website. The buyer contacts the seller, usually through an e-mail address in the ad, to indicate their interest. The seller responds via e-mail, often with a hard-luck story about why they want to sell the vehicle and at such a good price.

In the e-mail, the seller asks the buyer to move the transaction to the website of another online company….for security reasons….and then offers a buyer protection plan in the name of a major Internet company (e.g., eBay). Through the new website, the buyer receives an invoice and is instructed to wire the funds for the vehicle to an account somewhere. In a new twist, sometimes the criminals pose as company representatives in a live chat to answer questions from buyers.

Once the funds are wired, the buyer may be asked by the seller to fax a receipt to show that the transaction has taken place. And then the seller and buyer agree upon a time for the delivery of the vehicle.”

Consumers should watch out for the following red flags:

• Cars are advertised at too-good-to-be true prices
• Sellers want to move transactions from the original website to another site
• Sellers claim that a buyer protection program offered by a major Internet company covers an auto transaction conducted outside that company’s website
• Sellers refuse to meet in person or allow potential buyers to inspect the car ahead of time
• Sellers who say they want to sell the car because they’re in the U.S. military about to be deployed, are moving, the car belonged to someone who recently died, or a similar story
• Sellers who ask for funds to be wired ahead of time

Online classified and auction websites could work together, and share information on the devices running these scams, through the device reputation service provided by iovation Inc. Their fraud detection service, called ReputationManager 360, is a B2B SaaS solution incorporating complex device identification, device reputation and real-time risk profiling. It is used by hundreds of online businesses to prevent fraud and behavioral abuse in real time by analyzing the computer, smartphone, or tablet connecting to their online properties.

iovation’s “living shared database” is used by fraud analysts daily and shares the reputations of devices from literally every country in the world. This reputation is a combination of fact-based evidence (such actual chargebacks, identity theft, online scams and account takeovers), plus what risk can be inferred at transaction time.  Fraud analysts take this fight seriously and submit 10,000 events of fraud or abuse into the shared database each day.

Performing a device reputation check on a scammer attempting to create a new account at a sale or auction website would stop him before he has a chance to post advertisements for scams, preventing damage to the business and its customers. And when one of your good customers has been scammed, you can submit that evidence back into the iovation database to make sure it does not happen again, whether from the same device, or a related device.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses scammers and thieves on The Big Idea with Donnie Deutsch. Disclosures.