Most car dealers are ethical and they give their customers enough information about the cars before we buy, but what happens when the dealer use unethical practices to sell cars?
Some dealers are skirting state laws by selling their cars using the “curbstoning” method.
What is “curbstoning” and how can I recognize the dangers?
“Curbstoning” is a complex scam where car dealers use private people to help their sell cars.
That is a simple definition, but the scam is much more involved.
How is the scam operated?
Private party people and car dealers organize a scheme capable of fooling the average person.
The private party person places a car for sale in the local newspaper on behalf of the dealer.
The dealer skirts state laws by not purchasing a dealer’s license.
In most states if you sell more than five cars in a calendar year, you are required to buy a dealer’s license.
Each state establishes the car sales limit before a dealer’s license is required, so check the laws in your state.
Sometimes the dealer may have a dealer’s license, but he still could take part in this scam.
The inventory on car lots fluctuates so when the dealer has an excess inventory; he finds an alternative selling proposition.
The dealer pays an outside person to help him unload his inventory by using private party advertising.
A person posing as a private party person can pretend to be selling a friend’s car.
In reality his friend is the dealer.
Cars with many mechanical problems like those involved in floods can make their way to the market.
Auto mechanics agree a flooded car will have electrical problems.
Dealers buy cars at auctions inexpensively, but the buyer rarely is aware of the car’s history.
Where is the likely place for this scam?
Many people have already seen this scam in progress or they have already purchased from a person posing as a private party.
The most common areas are parking lots, newspaper ads, Craigslist, residences, auto trader, eBay, or any highly visible place where people may want to buy a car.
Curbstoning is not limited to any region. Law enforcement has arrested people from coast to coast.
Are there any tell-tale signs the suspects use?
Because the crooks alter their presentation to fit the situation it is hard to pin point any definite signs, however there are some red flags to avoid.
The most important thing is to have your personal mechanic inspect the car. An inspection may expose some hidden mechanical problems.
If the “private party” will not allow your mechanic to inspect the vehicle or he hurries your decision then your radar should be on alert.
He may discourage an inspection by promising you a useless warranty; unless he writes down his promises you could be left holding the bag (a car in this case).
Law enforcement officers urge you to ask for identification because if his ID does not match the registration you may be dealing with a stolen car.
Ask many questions about the history of the car. The seller may try to avoid giving away too many details because he has a limited knowledge on the vehicle himself.
Ask to speak to the owner because if it is a legitimate deal then the owner should be happy to help sell his car by answering some questions.
Pay close attention to the phone numbers listed as the contact person because crooks tend to use the same contact numbers on several different cars.
It is highly unusual to see the same person selling several cars unless he has a dealer’s license.
How can I protect myself?
You should always buy cars from reputable sources like car dealerships. If you buy private party vehicles go ahead with caution.
Carfax reports are a good starting point, but the report is only as correct as the information reported. How many of us have avoided insurance premium increases by fixing the damage ourselves?
What are my legal protections?
You are afforded little legal protection. In most cases, if you buy a car from a private party it is your responsibility once you hand over your money.
The car seller either avoids your phone calls or he gives you a bogus phone number. In either case it is difficult to place any blame on the seller.
Here is a good video that explains the scam in more detail and it shows the operation in action.
While this is one particular state, however no state is immune.
You can help prevent this scam by reporting curbstoning.