6 ways to steer clear of car-sale scams

By Liz Pulliam Weston

Bonnie Whyte of Glen Echo, Md., knew she'd get a better price for her 2000 Dodge Neon if she sold it herself.

But she wasn't quite prepared for the strange people, weird offers and scam artists a car-sale ad can attract. The most unsettling caller left a message that offered her half the asking price in cash, but insisted he needed to pick up the car within the hour.

"It just gave me the creeps," said Whyte, who didn't return that particular call.

Whyte finally managed to sell the car for $5,000, about $1,500 more than she would have received from a dealer. The whole experience, she said, was an education in avoiding the many ways car sellers can be ripped off -- from losing the car outright to a thief to being saddled with the liability if a recently sold car is involved in an accident.

"Frankly, it was very complex," said Whyte, "which is why most people chicken out and trade in for a lower price."

Buyers and sellers at risk

Selling -- and buying -- cars in private-party transactions can save you a lot of cash compared to letting a dealer handle the transaction. But both parties need to be careful to avoid being taken in by criminals.

Rolled-back odometers and "title washes" are among the more common scams that affect buyers, according to car expert Bob Kurilko of Edmunds.com. (In a title wash, a severely-damaged car is repaired, driven across state lines and issued a new title in an attempt to mask its history.)

Then there's "curbstoning," where a dealer tries to dump a lemon by pretending to be a private seller.

On the seller's side, many rip-offs employ certified checks. Many buyers insist on them, thinking they're as good as cash. But not always:

• The check may bounce. Some banks allow buyers to stop payment on certified checks, Kurilko said.

• The check may be phony. Counterfeiters can create realistic-looking checks or alter real checks in ways that make them worthless.

The criminals may be after cash, rather than the car. One frequent Internet-based scam involves sending a certified check for more than the asking price, then requesting the seller wire back the excess in cash.

There's always some pretext -- the buyer made a mistake, or needs the money for shipping, or whatever -- but the end result is the same: The seller discovers after sending the cash that the certified check is worthless.

Fake escrows don't deliver cars

Another popular scheme that can dupe both sellers and buyers: fake escrow services.

Legitimate escrow services act as middlemen, taking payment from buyers and then releasing the money to sellers once the purchased items have been properly transferred. They're common in real estate transactions and, increasingly, in Internet-based sales.

A fake escrow service can help a criminal steal a car by falsely verifying a payment has been made. More commonly, potential buyers are bilked of substantial sums when they respond to Internet advertisements of "great deals" on luxury cars. The escrow service accepts the cash, but the car is never delivered. (For more details, see MSNBC's coverage of this growing scam.)

Risks of relying on strangers

There's also the remote, but real, chance of being robbed or suffering bodily harm. Private-party sales involve meeting and getting into cars with strangers -- always a risky proposition.

"They're in the driver's seat," Kurilko said. "What's to keep them from driving to a remote spot and doing whatever with you?"

So why would anyone take the chance of a private-party sale? Because most transactions go though without a hitch, and the savings are substantial.

"It's a lot more convenient to use a dealer. The problem is you're going to pay for that convenience," said Kurilko, who always uses private-party sales to buy and sell his cars. "I can get such a good deal in the private-party market."

6 ways to protect yourself

If you're tempted to forgo the dealership, here are ways to avoid getting scammed:

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