Spot the signs of fraud when buying a used vehicle

Choosing to buy a used car versus a new car is a big decision. It can save you a lot of money, but it also comes with risks. Dishonest sellers may try to pull the wool over your eyes by altering a vehicle — or worse, selling a stolen vehicle. This could impact not only the safety of you, your loved ones and others on the road, but also the ability to insure your vehicle or get coverage in the event of a claim.

Here is what to look for when buying a used vehicle to avoid getting taken for a ride.

What are some common types of fraud?

Fraudulent behaviour can take many forms: from rolling back a vehicle’s odometer (so the buyer thinks the vehicle has experienced less time on the road than it actually has) to selling stolen vehicles. Other examples include not disclosing the full history of the vehicle and even forging the safety certificate. “The safety documents could be partially falsified or entirely fake,” says Pamela Bosko, Counter Fraud Tactical Analyst with Wawanesa.

Typically, when a vehicle is seriously damaged and is a total loss, the insurer settles monetarily with the owner, takes ownership of the vehicle, and then sells it at auction where it is clearly identified as having been in an accident. However in some cases, dishonest shops or individuals may buy the vehicle (particularly if it’s a high-end vehicle) and spend as little as possible to repair it – “maybe just the shell of the vehicle, and sometimes they won’t even replace the airbags,” says Bosko. “And then they’ll have the vehicle recertified.”

If a vehicle was involved in an accident, the vehicle history will show this, and will indicate that it was a salvage vehicle which was then recertified. So the history may look fine — even if it’s missing mandatory essential safety components like airbags.

Another scheme involves selling a stolen car with a real vehicle identification number (VIN) — just not the VIN for that particular vehicle. When criminals steal vehicles, the vehicles are often reported and registered as stolen; and the VIN will get flagged if a new owner tries to register it.

“What they do with that stolen vehicle is find a legitimate VIN from a vehicle overseas, maybe Germany, with the same year, make and model. The VIN is legit, it’s not flagged anywhere, and they will put it on their stolen vehicle and register it here,” says Nader Mishriki, Supervisor, Claims - Special Investigation Unit with Wawanesa. “Now it’s flying under the radar because it’s no longer a ‘stolen’ vehicle.”

If you inadvertently buy a stolen car, that may also affect your ability to make an insurance claim since the VIN actually belongs to another vehicle.

How to spot potential signs of fraud

It may sound overwhelming, but there are several ways to spot fraud, including the seller’s verbiage and behaviour. If they want a quick sale, for example, and they’re very particular about where they want to meet and show the vehicle, consider those red flags — especially if they’ll only accept cash. If the car has been rebuilt after a collision, it requires a safety standards certificate. If the seller doesn’t have that certification, it’s another concern and you should proceed with caution.

“If they’re unwilling to answer certain questions or they keep changing the subject when you ask particular questions, being evasive and not very cooperative, that should raise suspicion,” says Bosko. “There are a lot of situations where you have to go with your gut instinct.”

It also comes down to doing your due diligence. Check third-party auto classified sites to research the vehicle (including the year) so you can get a good idea of what market price is. If your research indicates the 2014 model of your chosen car typically sells for $10,000 and you find one for $7,000, that should be another potential red flag.

Check the vehicle’s history

But there’s a lot more you can do than go on gut instinct. Before you close the deal, make sure you learn the vehicle’s history — and never take the seller’s word at face value. Run the vehicle’s VIN through a paid service like CARFAX, which will provide you with the vehicle’s history:

• if it’s been in an accident
• if there have been any recalls by the manufacturer (and if those issues have been dealt with)
• if there are any liens on it (in which case, the car could be taken away by the financier)
• if it’s been reported as non-repairable due to a flood, fire or other incident

You can also see if the vehicle has been serviced properly and if there are any gaps. “Let’s say it’s a 2014 vehicle and the car history only starts in 2017. There’s a big gap in history so it’s possible the vehicle came from out of country or could be a refit vehicle,” says Mishriki. Even if the seller has provided you with a CARFAX report showing that it’s a clean vehicle, consider pulling your own copy to validate that the information hasn’t been amended or falsified.

Verify the VIN

To do this, all you need is the VIN located on the dash plate of the vehicle, which you can see from the outside (you can take a photo on your phone and run the report when you get home).

But that comes with a caveat: A criminal might scratch out the VIN or alter it in some way (turning a ‘3’ into an ‘8,’ for example). Aside from the dash plate, you can also find the VIN on the bottom of the driver’s door post, on the ownership permit and on the car’s proof of insurance. They should all match — if they don’t, call your broker and/or the police.

The Insurance Bureau of Canada (IBC) has a free VIN Verify service from participating IBC members in Alberta and Ontario, so you can find out if the vehicle has been in a flood or fire, or if it’s deemed salvaged or irreparable.

You can also use the VIN to identify a stolen vehicle by looking for any mismatches in the vehicle’s registration or service history. “If it’s got an oil change in December in Florida, and then it’s got an oil change in January in Calgary and then it’s got an oil change back in Florida a few months later, either this person is travelling a lot or we’ve actually got two different vehicles being rolled up under one serial number,” says Mishriki.

Before you sign on the dotted line, have your own trusted mechanic or shop do a thorough inspection. It might cost a bit extra, but could save you a lot of money in the long run.