Most Common Car Buying Scams & How to Avoid Them
Car buying scams involve fake listings, hidden fees, dealer tricks, and online fraud that can cost you thousands or leave you without a car. Learn the top scams, warning signs, and how to protect yourself and your family.
Table of Contents
Quick Facts
About this scam type
Shopping scams use deceptive tactics to trick consumers into spending money on goods or services that are misrepresented or do not exist at all. Car buying scams often play on urgency, lack of transparency, and the complexity of vehicle purchases to mislead buyers or steal personal information.
How scammers contact victims
Scammers use websites, digital ads, and online listings to reach buyers and sellers. Fraud can also occur in person at dealerships or through email, text, or phone. The anonymity and reach of online platforms make it easy for scammers to target large numbers of consumers quickly.
Who is most at risk
Anyone looking to buy or sell a car can be targeted, but older adults and less internet-savvy buyers are especially vulnerable. Scammers exploit those unfamiliar with digital processes or unaware of current car shopping risks. Families often need to look out for senior loved ones making big purchases.
Understanding the risk level
Car buying scams can result in thousands of dollars lost, stolen vehicles, identity theft, or being left without a car altogether. Some scams involve complex financing, fake titles, or even physical safety risks during in-person transactions.
Most Common Car Buying Scams
How it works: Dealers advertise cars at attractive prices, but when buyers arrive, the car is unavailable or the price changes. High-pressure tactics push buyers into pricier vehicles or add high junk fees and unwanted add-ons at signing. The FTC settled with Asbury Automotive in August 2024 for these practices, including unauthorized add-ons and discriminatory pricing. The FTC's CARS Rule (temporarily effective July 2024) aimed to stop these abuses.
Example Ad
2021 Honda Accord - Only $14,999! (Footnote: subject to approval, limited availability, price excludes add-ons and fees) Real Dealer Script
Sorry, that car just sold, but for just $4,000 more, we have a similar model available now. If you don't decide today, it could be gone. Red Flag Signs:
- • Too-good-to-be-true price ads with footnotes
- • Pressure to act fast or lose the deal
- • Surprise fees or add-ons not previously discussed
- • Dealer refuses to provide an out-the-door price in writing
How it works: The buyer is allowed to drive away with the car before final loan approval. Days later, the dealer claims financing fell through, demanding a higher interest rate or a bigger down payment. This often targets those with credit challenges. The FTC and CFPB warn about yo-yo financing scams, which can leave buyers with worse terms or vehicles repossessed unexpectedly.
Dealer Call Transcript
Your financing was not approved. Please return to sign new terms at a higher interest rate, or you could lose your car. Red Flag Signs:
- • Allowed to drive off the lot before financing is finalized
- • Unexpected call or letter demanding new loan terms
- • Dealer refuses to give copies of signed documents
How it works: Scammers create convincing websites or online listings for cars that don’t exist, often cloning real dealerships with minor changes or using stock photos. They pressure buyers to wire money upfront, then disappear. The FBI and Wisconsin DMV have documented sharp rises in fake dealership storefronts and fraudulent online car sales.
Fake Invoice Email
Thank you for your purchase! Please wire the $9,300 payment to our escrow partner. Once payment is received, shipment will be arranged. Red Flag Signs:
- • Dealer website has unusual web address or poor contact information
- • Sellers ask for wire transfers or payments to 'escrow' services
- • Listings use stock images or look generic
- • Insistence on online transactions only, no in-person inspection allowed
How it works: With digital paperwork, it's easier for sellers to slip in optional insurance, gap coverage, or service contracts without fully disclosing costs—sometimes even after the car is paid off (per CFPB findings). Buyers may not notice extra charges until the first bill arrives.
Example Add-on Description
Premium road hazard protection ($2,050) added to contract. Please click to e-sign and complete purchase. Red Flag Signs:
- • Paperwork not provided for review before signature
- • Charges for insurance, warranties, or services not requested
- • E-sign process rushed or confusing
How it works: Some cars are sold with altered Vehicle Identification Numbers (VINs), fake titles, or may be stolen outright. CA DMV and FBI warn these schemes are common, especially in private sales or online listings where sellers avoid inspections.
Fake Title Offer
Car has a clean title. We'll meet in a public place, bring cash only. Red Flag Signs:
- • Seller refuses official paperwork or title check
- • VIN plate looks tampered or mismatched
- • Seller pushes for cash deals with little documentation
How it works: When buying or selling, a scammer may claim to use a 'trusted' escrow or shipping company but it is fake. Or, the scammer mails a check for more than the car price, asks you to refund the difference, and the check later bounces. These scams often intersect with buying and selling online.
Overpayment Scam
The cashier's check is for $3,000 more than the car price. Please wire the difference to our shipper, and keep an extra $200 for your trouble. Red Flag Signs:
- • Buyer or seller insists on complicated payment arrangements
- • Use of unfamiliar escrow or shipping companies
- • Requests to wire or transfer excess funds
- • Check or payment clears, then bounces days later
Red Flags & Warning Signs
Top 5 Phrases Scammers Use
- 1 "Act now before it’s gone"
Creates false urgency to pressure quick decisions
- 2 "Price valid only today"
Tries to push you into agreeing before you compare or review details
- 3 "Wire transfer required for secure payment"
Requests for wire transfers are nearly impossible to reverse and are a common hallmark of fraud
- 4 "We just sold that one, but have a similar vehicle"
Signals bait-and-switch tactics to upsell you on pricier vehicles
- 5 "Seller will not meet in person or allow inspection"
Avoids accountability and prevents you from verifying the car's existence or condition
Scam Warning Signs
- Out-the-door price not provided in writingLegit dealers will provide a full detailed price that matches ads and discussions
- Lots of add-ons, fees, or last-minute changesUnexpected products or charges should be questioned before you sign
- Refusal to show original title or full paperworkTransparency about title status is required for any legal sale
- Pressure to pay by wire transfer or cash with no alternativeSafe purchases offer traceable, secure payment options
- Not allowed to see or test drive the vehicleRefusing an inspection is a major warning sign
Legitimate Communications
- Dealer or seller encourages independent inspectionLegitimate sellers welcome third-party reviews and test drives
- Out-the-door price listed clearly before you signAll fees and add-ons are disclosed up front, on paper
- Title and VIN match and are easily verifiedYou can check paperwork at the DMV or with a trusted agency
- Multiple safe, traceable payment options offeredCredit cards, certified checks, or verified financing methods
- Seller answers questions and provides official documentsNo hesitation or pushback about paperwork, history, or ownership
How to Protect Yourself from Car Buying Scams
Car buyers and families can stay safe by following these practical steps at every stage of the purchase.
- 1. Get the Full Price in Writing
Request a detailed, out-the-door price including all fees and add-ons before you visit the dealer or sign anything. Compare offers from multiple sources.
If possible, communicate by email so all pricing details are documented.
- 2. Never Rush a Purchase or Payment
Do not let salespeople force you to act on the spot. Take your time to review every offer and contract at your own pace.
- 3. Double-Check Online Dealers and Listings
Search for the dealership’s name and address independently, and compare to the official DMV website. Avoid listings with no local presence or requests for money sight unseen.
Always visit the car and meet the seller in person in a safe, public place.
- 4. Refuse Unrequested Add-Ons and Fees
Explicitly decline all extras you do not want on any paperwork or electronic contract. Review every charge and question anything confusing before signing.
- 5. Use Safe and Traceable Payment Methods
Only use certified bank checks, verified financing, or credit cards for payment. Avoid wiring money, paying in cash, or using unfamiliar services.
- 6. Inspect Title, VIN, and Ownership
Confirm the Vehicle Identification Number matches paperwork and check the title status with your state DMV. Walk away if anything appears altered or missing.
Want real-time alerts on scam car listings and dealership reviews? Get proactive protection for your family with Lifeguard.
What to Do If You’re a Victim of a Car Buying Scam
Act quickly if you think you or a loved one has been targeted. Fast action can limit losses and help you recover.
- 1. Contact Your Bank or Lender Immediately (Do immediately)
If you sent money or shared account information, contact your bank or credit card provider right away to freeze funds and stop further transfers.
- 2. Report to Law Enforcement and the FTC (Do immediately)
File a report with your local police and submit a complaint to the FTC at ReportFraud.ftc.gov. Provide all documentation, emails, and payment details.
- 3. Notify the DMV and Auto Title Authorities (Within 24 hours)
If you suspect a fake title, stolen car, or VIN tampering, contact your state DMV or local vehicle licensing office. They can verify documentation and may prevent future fraud.
- 4. Monitor Accounts and Credit Reports (Within 1 week)
Check for unauthorized transactions or signs of identity theft. Place fraud alerts on your credit file with the major bureaus.
- 5. Consult the FBI IC3 or Internet Crime Complaint Center (Within 1 week)
Report fraudulent online listings or wire transfer scam attempts at ic3.gov. The FBI tracks patterns of auto fraud nationwide.
- 6. Get Expert Help and Support
Seek out legal assistance or local consumer agencies. Support services are available for victims of financial or identity fraud.
For more information, visit <a href="https://www.ftc.gov/consumer-advice" target="_blank" rel="noopener noreferrer">FTC Consumer Advice</a> or your state DMV for reporting and recovery resources.
Frequently Asked Questions
Verify the dealer’s official address using your state DMV website. Watch for suspicious web addresses or pressure to pay upfront by wire. Legit dealers welcome in-person visits and inspections.
Contact the dealer immediately in writing, request removal, and file a complaint with the FTC or your state attorney general if not resolved. Save all documentation.
Most escrow scams use fake websites or services. Only use escrow companies recommended by U.S. state agencies or your bank, and never wire money to unfamiliar services.
Offer to help review offers, dealership details, and contracts. Encourage them to get all prices in writing and consult with a trusted family member before signing or paying.
Contact your bank or credit card company right away. Some wire transfers can be stopped if caught early. Report the scam to authorities to improve your chances.
Report to the FTC at ReportFraud.ftc.gov, your state DMV, and the FBI’s Internet Crime Complaint Center at ic3.gov.