Q&A Vehicle scams: Don’t let fraudsters drive off with your cash

Living through an economic downturn has no doubt made us all reconsider our relationship with money. With less cash in our pocket and increased lockdown restrictions, driving can be a necessity, allowing us to visit our local supermarkets, go on daily walks and of course, do some much needed car-eoke to our favourite albums.

Unfortunately, the lockdown has also presented fraudsters with new opportunities to exploit drivers. Fraudsters have been using the lockdown as an excuse to prevent buyers from viewing cars which often don’t exist, and even selling fake insurance which can leave drivers with no cover if they were involved in an accident. More than 2,000 vehicle scams were reported to Action Fraud last July - a 550% increase when compared to just four months earlier in March, with total losses increasing from £326, 619 to £2,137,160. While the majority of car listings online are legitimate, it pays to be wary of the red flags.

Q: What are the most popular type of vehicle scams?

Two of the most prevalent vehicle scams are private sale scams and ghost broking.

A private sale scam involves an individual selling a vehicle that either does not exist or that they do not own, usually because there is outstanding finance. These are often sold through a private sale site and offer limited consumer protection. Once someone has paid for a vehicle that does not exist, it can be very difficult to get their money back. Purchasing a vehicle that has an outstanding finance on it, usually results in the finance company recovering the vehicle, leaving the buyer out of pocket.

Ghost broking involves selling fake motor insurance or applying for motor insurance on behalf of a driver using fake details. This is a serious crime which leaves motorists driving without insurance, putting themselves and other road users at risk.

Both scams usually involve drivers buying vehicles or policies from untrustworthy sources, so while they think they are getting a ‘bargain’, they could be left financially and legally worse off.

Q: How can drivers spot a ghost broker?

Ghost brokers usually operate online on social media forums and student messaging boards. Very few legitimate brokers will use these channels to directly communicate and discuss private information such as personal details and insurance premiums. Secondly, most ghost brokers use comparison websites for insurance quotes, often providing false information to get cheaper quotes, whereas legitimate brokers will have a direct relationship with insurers. If a broker has provided a quote, individuals should use a comparison website to double check if the quote is correct.

Very few ghost brokers are contactable by landline telephone numbers – another tell-tale sign. Motorists using a broker for insurance should check the Financial Conduct Authority (FCA) website to ensure that they are authorised to offer these services: https://register.fca.org.uk

Q: What effect will the pandemic have on vehicle purchase scam levels?

The pandemic will increase vehicle scams in two ways. As a result of more people working from home and not travelling to work, and potentially having to reduce their income – they may have a vehicle on finance that they no longer need. Rather than continuing to pay for vehicles that they aren’t using, these individuals may be tempted to sell the vehicle privately – even though there is finance outstanding.

Secondly, some business owners may need to start using vehicles - for example business that need to deliver food or services that would have normally been delivered in store. Where these business and individuals are having to diversify and change their activities, they are more likely to purchase vehicles or insurance policies that look great value and which, realistically, are too good to be true.

Q: Why are levels of vehicle finance and purchase scams likely to increase?

Fraud is often be described in two forms, opportunistic and organised. Unfortunately, in any period of economic downturn both forms of this type of fraud increase. People who are suffering from reduced income, redundancy or impacts on their own businesses can sometimes feel that they can rationalise or justify committing certain types of fraud.

Individuals who are struggling to afford finance agreements may be more likely to sell vehicles which they do not own, and equally individuals who need vehicles may be tempted to purchase from less reputable sources for cheaper prices.

In respect to organised fraud, we know that there are career criminals who know how to use situations like the pandemic to their advantage.

Q: How can drivers protect themselves against vehicle scams?

The key to avoiding falling for a scam whereby finance is outstanding on a vehicle is to do your diligence about the vehicle and the seller, and to document that you have done so. There are many vehicle check services available online, however some do not perform a check for outstanding finance or hire purchase interest – many just check if the vehicle has been reported stolen or if it is a category D insurance, meaning it has been previously written off.

Vehicle checks which include checking for outstanding finance usually cost a little more than a basic check, but is essentially to protect yourself from scams. If the seller states that they will settle the finance with the sale proceeds – document this and all correspondence with the seller in order that you can demonstrate you have purchased the vehicle in good faith. Avoid purchasing vehicles that look too good to be true, for instance if the price is significantly below market value.

Q: What are the red flags when it comes to fake listings?

The current climate requires responsible social distancing so it may be plausible that a seller doesn’t want a vehicle to be test driven or for discussions and exchanges to happen in their home. However it’s important to consider other ways to avoid scams.

Avoid getting caught out by fraudsters by:

• Checking the protection the sale site offers you, e.g. PayPal buyer protection.
• Asking to see the v5 document and the service history on the vehicle.
• Avoid cash payments.