Online scam artists peddle luxury cars they don't own
By MIKE TIERNEY The Atlanta Journal-Constitution
BUYER BEWARE Do's and don'ts for online auto auctions: • Get the car's VIN and run a Carfax vehicle history report, starting at $20 at carfax.com. • Avoid e-mailing the seller directly to stay in the safe harbor of the host auction service. • Refrain from transferring money by means not stipulated by the auction site. • For expensive cars, especially those with low prices or minimum bids, inspect them in person before bidding. Source: Jeff Ostroff, CEO of carbuyingtips.com
Mechanic Paul Millsap is more at ease cruising the North Georgia roads in a vintage auto than cruising eBay, the cyberspace flea market.
Venturing onto the online auction site in August, the Internet novice spotted a snazzy dark blue 1967 Shelby GT 500. Asking price: $8,600.
“That would be a very excellent deal,” the Jasper resident said. “I was suspicious.”
Still, Millsap swapped e-mails with the supposed seller, who claimed he was divesting property of his late brother in London, the victim of a bike accident. The cost even would include overseas shipping and door-to-door delivery.
Millsap, 56, wired a $3,000 deposit early one evening. At midnight, his nephew called after running a check on the car's serial number, or VIN, and tracing it to metro Atlanta.
Millsap stopped payment before the money order could be cashed, thus limiting the consequences for his gullibility to Western Union's $135 nonrefundable transfer fee.
The car's actual owner — until he sold it recently, and legitimately, for $107,000 — has lost track how many times it has popped up on eBay.
“At least five,” said Tom Fraser, president of Fraser Dante Limited Classic Cars, while patting the Shelby at his Roswell dealership. “This has been the most scammed car [of more than a dozen] we have.”
Fraser is an indirect victim of fraudulent sales on eBay. Scammers download photos from his dealer Web site and list the cars at such can-you-believe-it minimum bids or prices that online shoppers are blinded by visions of steering prized antiques. Would-be buyers send an initial payment, which the con artists pocket before disappearing.
Federal regulators don't categorize complaints of online fraud, but autos are believed to rank high among the hoaxes, given that they are popular, big-ticket items. Data collected by the Federal Trade Commission indicate deceitful Internet auctions are widespread and growing. Overall, the FTC logged 79,573 complaints about online auctions last year — up 56 percent from 2002 and way up from the 106 complaints recorded in 1997, the first year the commission kept track.
The National White Collar Crime Center indicates that auction fraud is most widespread on eBay, if only because it is the largest and busiest site.
Fraser ascribes another reason to the prevalence of rip-offs on eBay. He argues that the online megastore, which typically offers 29 million items for sale at a time, should operate as a traditional auto action service — requiring proof of ownership.
“They are not following legal auction procedures,” Fraser said. “People are getting scammed something terrible, and eBay does nothing to stop it. Nothing.”
During a stroll through his showroom, Fraser sounds like a sleuth instead of a salesman.
A blue-and-white '66 Shelby GT 350, available for $72,950, appeared on eBay for $8,000 . . . a 1966 burgundy Pontiac GTO convertible, price tag of $44,950, with an opening bid online for $5,000 . . . a black '65 Pontiac GTO, yours for $58,950 at the store, $9,499 online . . . and the multiscammed '67 Shelby.
In his office, Fraser digs out a file bulging with printed e-mails from eBay browsers — some alerting him, others wondering why he was charging exorbitant rates for the same cars found for rock-bottom online.
“This is hurting my business,” said Fraser, whose clients hail from Hollywood (John Travolta, Charlie Sheen) to the Middle East (Kuwait's prime minister). “People ask, ‘Why should I pay your price when I can get it [cheaper] on eBay?’ ”
Hani Durzy, an eBay spokesman, assessed the problem as limited. The site expects to record more than $10 billion in sales this year, with 0.01 percent attributed to fraud, he said.
The auction site is not designed to verify ownership of items placed for sale, Durzy said. “We are a marketplace, not a retailer. We don't take possession of the goods.”
Durzy said eBay can close down bidding on a suspicious item, but it will not react to an item that might carry a conspicuously low price tag or opening bid.
“We are not experts on anything sold on the site,” Durzy said. “We don't assign motive to any of our buyers and sellers.”
The Web site does present tips to buyers and the option to purchase vehicle protection for up to $20,000. It encourages shoppers to avoid communicating with sellers out of the confines of the site.
“That's like going into a dark alley to buy something off the truck,” he said.
Jeff Ostroff, chief executive of Web site carbuyingtips.com, said “buyer beware” has never been more applicable than to Internet commerce, especially with “nobody [in government] enforcing much of anything.”
For his part, Fraser said there is little he can do to stop the scams. His barrage of angry e-mails to eBay prompted one phone conversation and a written response. In it, eBay acknowledged violations with vehicle auctions and promised to investigate but said it could not disclose the results. Fraser said his missive to the FBI, sent from a link on eBay's site, has generated no response.
A fraud investigation team operated by eBay will shut down an auction when legitimate misgivings are raised by shoppers. At least one phony bidding session on a Fraser Dante car was halted and the account suspended.
Efforts by a fraud investigation wing at eBay have resulted in some swindlers being prosecuted, the latest a Californian who in September pled guilty to stealing more than $100,000 via sales of nonexistent cars.
Ostroff credits eBay for being “about as proactive as they can be.” He maintains that Fraser's proposal to require documentation of ownership for sellers would be ineffective, saying they could submit bogus car titles.
Fraser has rejected one possible solution. He could code his own Web site to prevent downloading of photos but fears his business would be damaged worse if customers could not print out or e-mail pictures of cars.
The photos of Fraser's wares appear on eBay with sales pitches replete with classic car lingo: full restoration, immaculate condition, an original. The creative scammers add a sob story — desperate need of funds or, in the case of the '67 Shelby that left Paul Millsap smitten, death of a relative.
But getting suckered is not Millsap's greatest regret.
“It's not being able to buy that car at that price.”