When it comes to buying a car, it can be difficult to know who to trust.

The industry is full of muddled upsells and overpromises, and it's easy to fall victim to scams and fraud.

The demand for used cars is higher than ever, and with online platforms such as Facebook Marketplace and Gumtree, the presence of scammers is also higher than ever.

In the first three months of 2021, used-vehicle buyers lost almost $300,000 to scammers. That was more than the whole of 2019. So 2023, is the time to raise suspicions when it comes to wheeling and dealing.

At carbar, we want to educate car buyers on how to avoid falling victim to these scams and help them make informed decisions when purchasing a car.

Let’s look at the common types of car scams and fraud, red flags to watch out for, and ways to protect yourself.

Uncovering the deception: common types of car scams and fraud to watch out for

If you're a potential buyer, it's important to be aware of the different types of scams and fraud that can occur when scammers are trying to entice buyers.

New and used car sales are in high demand, so private buyers need to be one step ahead of scammers pretending to offer a used car for an unusually low listing price. If it sounds too good to be true, then it probably is.

Here are some of the most common types of car scams and fraud to watch out for:

"Lemon" cars

A "lemon" is a car that has hidden mechanical issues that may not be apparent until after the sale has been made. These issues can range from engine problems to transmission issues to electrical faults.

Research the car's history (ask for log books) and check for any reported issues or warning signs. It is also best to have a mechanic inspect the car before buying, as this common scam is not always easy to spot.

Odometer fraud

Odometer fraud is when the mileage on a car has been rolled back to make it appear as though the car has less wear and tear than it actually does. To spot odometer fraud:

• Check for mismatched tyres or brakes that appear worn for the car's supposed mileage
• Look for signs of tampering on the odometer itself
• Research the car's history, checking for any inconsistencies in the reported mileage

To avoid odometer fraud, you can also get a vehicle history report from a reputable source and look for service records that match the odometer reading.

The penalties for tampering with odometers in Australia are high (some scammers may even face jail time), so it should be reported to relevant authorities.

Vehicle report scams

Another increasingly common scam is the practice of hiding a car's history, such as flood or accident damage. Potential buyers should:

• Check for signs of flood or accident damage, such as rust or mismatched paint
• Research the car's history and look for any inconsistencies or gaps
• Get a vehicle history report from a reputable source such as CarHistory. You just need to provide the Rego or VIN and for a relatively small fee, they will provide a report that includes:
  • Finance owing
  • Stolen checks
  • Odometer checks
  • Written off checks
  • Vehicle valuation
• Have a mechanic inspect the car before buying

If someone trustworthy is selling a car, they should be able to provide at least some of the information about the history or be willing to provide the report for you.

Bogus add-ons

Bogus add-ons are unnecessary or non-existent extras that are added to the price of a car. 

To spot bogus add-ons, be aware of common add-ons that are often added to the price of a car (possibly on a car ad), such as paint protection or fabric protection and research the car's features, comparing them to the ones listed on the sales agreement.

To avoid bogus add-ons, read the sales agreement carefully and ask questions about any add-ons that you're not familiar with. Don't be afraid to walk away from a deal if you feel like you're being taken advantage of.

Seller claims

It's important to remember that not all car dealerships or sellers are bad actors, but being informed and aware of these common types of scams and fraud can help protect you from falling victim to them.

If you have a family member or friend who has substantial car knowledge, ask them to provide support when it comes to buying a car from a dealer or online platform.

Be alert: spotting the red flags

As you begin your used-car-buying journey, it's important to be aware of the many red flags that could indicate a scam or fraud:

Extremely low prices compared to similar cars

How to spot: You may notice that the market value of the car is significantly lower than similar cars on the market.

Why it's a red flag: This may indicate that the car has hidden issues, could be stolen, or that the seller is looking to get your personal details without any intention of selling.

How to avoid: Research the car's history and compare prices to similar cars on the market. If the price seems much lower than it should be, consider it a warning sign to ask questions and further investigate the listing.

Pressure to make a quick decision

How to spot: A seller who is pushing you to make a decision before you're ready.

Why it's a red flag: It may indicate that the car is not as good of a deal as it seems and they are trying to rush you before you figure it out.

How to avoid: Take your time and make sure you're comfortable with the decision before making a purchase. Make sure you consider taking the car for a test drive before paying the seller any money.

Requests for large deposits or cash payments

How to spot: Requests for large deposits or cash payments before you've had a chance to fully inspect the car should raise suspicions.

Why it's a red flag: It may indicate that the seller or dealership is not legitimate and may be trying to scam you.

How to avoid: Never provide a large deposit or cash payment before you've had a chance to fully inspect the car and research the seller or dealership.

Lack of documentation or incomplete paperwork

How to spot: Missing or incomplete paperwork, such as registration or title documents.

Why it's a red flag: It may indicate that the car has been stolen or has a hidden history.

How to avoid: Research the car's history and make sure all paperwork is complete and legitimate before making a purchase.

Spoof email addresses

How to spot: Email addresses that don't include names, recognisable mail providers or may seem overly complicated for an online seller or dealer.

Why it's a red flag: If they want you to send money to a strange email address that doesn't match their details or seems suspicious, it may indicate they are an off-shore seller or scammer.

How to avoid: Check that the email they are using for their listing, communications or payment has the correct email format.

Unusual payment methods

How to spot: The seller may ask you to pay by providing your bank details, driver's licence, or via a direct bank transfer to an unknown seller.

Why it's a red flag: Lost personal information and identity theft are serious issues, and while some people can spot the warning signs, others can be stung by the loss of funds.

How to avoid: When you buy a car online, avoid unusual payment methods and opt for a safer payment method that also provides you with buyer protection. If you're unsure about transferring money online, ask the seller if they will accept a money order or cashier's check which can be arranged through your bank.

Protect and prevail: safeguarding your car-buying experience

Safeguard your car-buying experience with these tried and tested methods:

Research the car and the seller before making a purchase

How to do it: Look up the car's history, check for reviews of the seller or dealership, and talk to other people who have bought cars from them.

Why it's important: It will give you an idea of the car's condition and the seller's or dealership's reputation, which will help you make a more informed decision.

Get a pre-purchase Inspection by a mechanic

How to do it: Find a reputable mechanic and have them inspect the car before you buy it.

Why it's important: A mechanic will be able to spot any issues that may not be immediately apparent, which will give you a better idea of the car's true condition.

Check the car's history using a service like CarHistory or CheckVIN

How to do it: Use a service like CarHistory or CheckVIN to check the car's history and see if it has been in any accidents or has any other hidden issues.

Why it's important: It will give you a more complete picture of the car's history and help you avoid buying a car with hidden damage.

Don't be afraid to walk away from a deal that seems too good to be true

How to do it: Trust your instincts and don't feel pressured into making a purchase if something seems off.

Why it's important: If a deal seems too good to be true, it probably is. By walking away from a questionable deal, you'll be protecting yourself from falling victim to a scam or fraud.

Driving away with confidence: navigating the scams and frauds of car buying

Buying a car can be exciting, but it can also be a stressful experience. 

With so many scams and frauds out there, it's important to be informed and vigilant. And at the end of the day, the most important thing is to find a car that meets your needs and fits your budget.

Another option worth considering is a car subscription. In addition to the traditional methods of car purchasing, you have the opportunity to buy your subscription car outright or opt for a finance plan. Simply inquire with our team for pricing details. 

As a subscriber, you gain access to a comparison of 30+ matched lenders within 60 seconds, enabling you to choose the most suitable option. You have the flexibility to keep up with weekly repayments or choose to purchase the car outright. This alternative approach eliminates the hassle and potential risks often associated with buying a car outright, providing you with the perks of car ownership without long-term commitments.