An upsurge in online targeting of newer-model and luxury car buyers is emerging as a new and dangerous trend among unlicensed dealers (curbsiders) and fraudsters, recent investigations by OMVIC (Ontario Motor Vehicle Industry Council) reveal. The Ontario regulator of vehicle sales warns vehicle-buyers to be vigilant for illegal online sellers and fake out-of-province sellers offering high-end cars, SUVs and trucks.
“This represents a change in strategy by curbsiders and fraudsters,” says OMVIC manager of communications and education Terry O’Keefe. “Curbsiders, unlicensed dealers who usually pose as private sellers, used to target buyers of inexpensive reliable economy vehicles. Now, we’re seeing a shift towards newer and high-end vehicles such as Mercedes, BMW, Lexus, and even newer-model pick-ups, which command higher prices and higher profit margins. Unfortunately, just as curbsiders commonly misrepresent themselves, they also misrepresent the vehicles they sell, which are often insurance write-offs, accident-damaged or odometer-tampered.”
This means car buyers have to be doubly vigilant: lurking in online classifieds are not only curbsiders, but also out-right fraud artists operating fictitious dealerships supposedly based in the U.S. These two trends are converging when it comes to car-buying rip-offs. “Anyone considering buying privately or from a seller located outside Ontario, including U.S.-based dealers, must be extra vigilant. Consumers should understand they are only protected by Ontario’s consumer protection laws when they buy from an OMVIC-registered dealer. If they buy privately or outside the province and something goes wrong, OMVIC can’t help,” adds O’Keefe.
Earlier this year, OMVIC warned all Canadians about phony dealerships supposedly based in the U.S. These “dealers” targeted Canadians by advertising in Canadian online marketplaces, offering high-end and exotic vehicles at attractive prices. The fake dealerships had polished websites and phony reviews for the dealerships on numerous other websites. “Unfortunately neither the dealerships nor the cars they purported to offer existed. We know of numerous victims who lost tens of thousands of dollars each,” said O’Keefe. These online techniques persuade even smart yet strongly motivated buyers to drop their guard and chase the great buy they’ve always dreamed of owning. And, online often means the crimes are borderless and faceless so it’s much more difficult to verify and catch criminal activity.
A survey carried out for OMVIC highlights a heavy reliance by car buyers on online sources of information: 40% visited a dealer website; 34% visited an automobile-specific classifieds site (e.g., autotrader.ca); and 23% relied on other online classifieds (e.g., Kijiji, Craigslist).
Research from the Used Car Dealers Association (UCDA) last year found that almost one-third (29%) of vehicle ads on online sites were placed by curbsiders. “They’ve mastered using the Internet to make their appeals look professional and authentic,” O’Keefe emphasizes. “Often their vehicles are priced below market value. Consumers should see this as a warning, not an opportunity.”
OMVIC’s research also noted that a high percentage of Ontario car buyers are willing to risk losing a lot of money and accept the risk associated with curbsiders: 43% said that knowing consumer protection is only available when buying from an OMVIC-registered dealership would have no impact on where they buy the next time
“There seems to be a bit of a disconnect for some buyers,” suggests O’Keefe. “Even knowing they have no consumer protection doesn’t stop them from dealing with the riskiest sector of the automotive marketplace.”
Under Ontario law, car buyers are only protected by consumer protection legislation when they buy from an OMVIC-registered dealer. This includes:
§ all-in price advertising with no hidden fees
§ mandatory full disclosure of a vehicle’s past use, history and condition
§ cancellation or rescission rights if specified information is not disclosed
§ access to the Motor Vehicle Dealers Compensation Fund.
Consumers are encouraged to take OMVIC’s new car-buying quiz to learn more about their rights when it comes to vehicle purchases. The quiz and other valuable resources can be found at BuyWithConfidence.ca.