Experts have issued fresh warnings over used-car scams on Facebook and other social media channels, as the latest figures show a sharp rise in the number of consumers caught out by bogus marketplace ads – placed by people with fake identities – for vehicles that don’t exist.
The coronavirus crisis has pushed up used-car prices as commuters try to avoid public transport. However, this has led to an increase in bogus used-car ads on social media channels such as Facebook Marketplace.
Figures supplied by the Australian Competition and Consumer Commission (ACCC) show used-car scams were the second-highest form of fraud this year – after fake ads for pets, and ahead of dodgy sellers of phones and computers.
“Losses to online shopping scams have increased 42 per cent this year,” says the ACCC, whose Scamwatch division received more than 12,000 reports of online shopping fraud and about $7 million in reported losses so far in 2020.
In particular, losses on classified websites, such as Facebook Marketplace and Gumtree, have increased by 60 per cent this year, to $4.5 million, said the ACCC.
Of those scams, used-car frauds accounted for $808,500 in losses – that’s the total amount of money people have reported as paying to someone, for a car that does not exist.
Motorists looking to pick up a used-car bargain are particularly vulnerable because “more people have been shopping online this year due to COVID-19 restrictions,” said ACCC Deputy Chair Delia Rickard in a media statement.
“Watch out for popular products being sold at prices much lower than (others)” and “requesting payment through direct bank transfer” without first inspecting the car.
“Take the time to consider who you are dealing with and don’t be pressured by special offers,” said Ms Rickard.
The Australian Automotive Dealers Association (AADA) says while online deals may seem attractive, buyers have no recourse if the ad is bogus or the car does not exist.
“Although consumers will see some well-priced cars listed by private sellers on social media, they need to be aware that there are risks compared to buying from licensed dealer,” said James Voortman, the CEO of the AADA, which represents 3000 dealers nationally.
“Buying from a car dealer provides consumers with statutory warranties and cooling-off periods as required by state law. You can also have peace of mind that used vehicles purchased from a dealer have a clear title guarantee, which is a written notice ensuring the consumer has not bought a car which is stolen or has money owing on it.”
Mr Voortman added “You simply do not have these protections when buying privately from social media”.
“Dealers have not only a legal obligation (under various state laws), but have to satisfy the car brands to which they are franchised,” said Mr Voortman.
“You can be sure that they will put all used vehicles through thorough inspections to determine the suitability of that vehicle for sale. Unsuitable vehicles are generally wholesaled or sent to auction.”