Car Title Scams Explained: How to Safely Buy a Used Car

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Yaniv Masjedi

Organic Growth at Aura

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    How To Avoid Used Car Scams

    Buying a new vehicle is relatively safe and easy. But purchasing a used vehicle from a private seller or even a dealership can open you up to a number of used car scams and frauds — including the most common one: car title scams.

    In a car title scam, the seller changes information about the vehicle’s history to either sell it for more than it’s worth, hide damages, or get away with tax fraud. 

    Vehicles are one of the largest purchases you can make. And being the victim of car title fraud can leave you without transportation and out thousands of dollars in repairs or overpayment. 

    So, how can you avoid purchasing a vehicle with a fraudulent title?  

    What Is a Vehicle Title?  

    A vehicle title is a state-issued legal document that shows proof of ownership. Simply put, if your name is not on the title, you don’t legally own the vehicle.

    Car titles will typically contain information about the vehicle and owner, such as:

    • Model, year, and paint color.
    • Odometer reading and the date it was recorded.
    • Current owner’s name and address.
    • The vehicle’s unique identification number (VIN).
    • The physical state of the vehicle.

    How Do Scammers Steal Vehicle Titles? 

    There are several ways a scammer can change or alter the vehicle’s title information to make the car seem more valuable than it is — such as odometer fraud. But the most damaging is when they change the physical state description.

    Depending on the state of the vehicle, the Department of Motor Vehicles (DMV) and insurance companies will give it a title classification as either clear, clean, rebuilt, or salvage. 

    “Salvage” is used to describe cars that require heavy repairs that exceed the value of the vehicle. For example, if the car was totaled in an accident, destroyed by vandalism, or exposed to flooding. 

    Salvaged vehicles don’t usually sell for much. So used car scammers find ways to change the vehicle’s designation and get you to pay more. 

    Detecting car title scams can be difficult when you don’t know what warning signs to look for. So, what should you beware of when looking at a used car title? 

    Car Title Scams to Avoid

    Car title scams almost always follow the same pattern. Here are the three types of car title frauds you should be looking for when buying a used car:

    1. Title washing
    2. Title jumping
    3. Vehicle Identification Number (VIN) swapping or cloning

    Title Washing

    Title washing is the most common scam for vehicle titles. It involves hiding or removing liens or a rebuilt or salvaged status from a vehicle and making it appear as though there’s nothing wrong with it.

    CarFax reported back in 2014 that 800,000 vehicles were on the roads across the country with a “washed” title.

    Title washing can be done both physically and digitally.

    First, scammers will sometimes create legitimate-looking, but fake, vehicle titles to trick potential buyers. 

    They can either print out a document to present to a prospective buyer in-person, or, when asked to see the title in online interactions – like buying a vehicle on Facebook Marketplace – they’ll send over a file that can be hard to identify as fraudulent.  

    Second, title washing can also be achieved through legal grey areas. 

    Not every state requires that vehicle owners declare the salvaged status on their car title. So scammers will often register their vehicle in one of those states. 

    While the scam is a federal offence, local law enforcement and state vehicle administrators may have difficulties proving a crime if the washing was done out-of-state. 

    Title Jumping

    Title jumping is another common car scam to look for, especially when buying from a used car dealer. 

    In the title jumping scam, the current owner (such as an unlicensed car dealer) doesn’t register the vehicle in their name before selling it to a new buyer. 

    Not only does the previous owner skip out on paying taxes and fees, but you're stuck dealing with any problems the vehicle has — which may or may not be covered under a warranty. Plus, you’ll most certainly face issues in the future when seeking to sell the vehicle.

    In other cases, a scammer might buy a salvaged vehicle out-of-state for a cheap price, skip registration, and then sell it to an unknowing buyer. 

    Vehicle Identification Number (VIN) Swapping

    The final type of car title scam is VIN swapping, switching, or cloning. 

    VIN swapping is a relatively new scam where a seller will alter the vehicle identification number (VIN) to hide its status or disguise a stolen vehicle as a legitimate one. If you discover after the fact that your vehicle has had its VIN swapped, law enforcement will impound it. 

    VIN “cloning” is a similar fraud where scammers copy a VIN from a legally owned vehicle and then use it on their own car. This type of scam is rarely caught as licensing agencies don’t check for duplicate VINs. 

    If you suspect your car might be stolen or had the VIN changed, the National Crime Bureau offers a free online VINCheck® service you can use to be sure.

    What are the Consequences of Vehicle Title Fraud?

    Car title scams are more than just an annoyance. There are real consequences to getting scammed with a used car, such as:

    1. You pay too much for a damaged vehicle. If you think you’re buying a “clean” car, you’ll pay more than the actual value of the vehicle. 
    2. You end up with a car that is broken or in need of repairs. A fraudulent car title could cause you to end up with serious repair bills or even driving a dangerous vehicle.
    3. You buy a vehicle that is near the end of its life. If a scammer has changed the odometer reading in the car and on the title, you might be driving something that is close to the end.
    4. You could be driving a stolen vehicle. If the police stop you, your car will get impounded and you could even end up with legal trouble.
    5. You could buy a fraudulent vehicle from an identity thief. A scammer who changes a car title probably won’t stop there. They might even use the information they collect about you during the sale to steal your identity. Look for these warning signs of identity theft if you think you’ve been a victim.

    How to Avoid Getting Scammed When Buying a Used Car

    Despite how dangerous and frightening these scams may seem, there's no need to rely on expensive dealers to purchase a new car or fear every independent seller or used car dealer.

    Here are some of the potential red flags that can signal something isn’t quite right with a vehicle sale. 

    1. Double check out-of-state registrations

    If a used vehicle has been registered in another state, ask about it. 

    Question the seller’s reasoning: Did they live in a different state before? Did they find a great deal that wasn’t local? Or is this one of the states with lax laws about salvage title designations? 

    2. Beware of recently issued titles

    If you find that the title was issued relatively recently, this may be a red flag. 

    Once again, ask the seller questions about why this is the case. If the title was issued recently, and it is attached to an older vehicle, or registered non-locally, you may want to distance yourself from the purchase. 

    3. Inspect sketchy print quality or missing watermarks 

    A poor-quality title can be a red flag that it's been tampered with. This might be fine if you’re buying an older vehicle. But be careful if it’s only a few years old and the title looks damaged or in poor shape. 

    Also, look for odd or missing watermarks. States include watermarks on salvage titles for security reasons. 

    If you’ve never inspected a vehicle title before, you might not know what to look for. Look up a few examples or check your own vehicle to know what it should look like before meeting the seller. 

    4. Question sellers who refuses to meet at the DMV

    Meeting the seller at the DMV almost ensures you won’t be the victim of a car title scam. You’ll be able to show the documents to a professional and check any information against the seller’s drivers license

    If they refuse to meet you there, or keep coming up with wild excuses, it might be better to walk away. For dealerships, look them up on the Better Business Bureau (BBB) website first.

    5. Look for mismatched information on the title

    A CarFax Vehicle History Report is much harder to fake as it’s a digital document stored on a secure server. Use the provided VIN to look up the registered vehicle information and see if it matches what’s on the title. 

    If the information is wrong or mismatched, that’s a pretty big red flag. 

    Getting a CarFax Report and/or a VIN check is a great way to ensure that the car you’re purchasing is in good condition. Never neglect a VIN check. 

    Selling a Used Car? Avoid These Scams

    Purchasing a used vehicle comes with risks. But what about when you’re trying to sell your own vehicle? 

    Car buying scams target used car sellers to get access to your private information or even steal your vehicle and money. If you’re looking to sell a used vehicle, here are some scams to watch out for.

    1. The fake PayPal used car scam

    PayPal scams generally follow a specific pattern: after you list your vehicle on a car sale site, you get an unnaturally quick response from a buyer. The buyer offers to pay X amount, usually the listing price, and typically avoids meeting in person for any reason. 

    The desire for an only-online car transaction should be the first red flag. It's too easy for people to try to scam you online.

    The buyer says they will throw in extra money to cover any fees that may need to be processed in the sale, typically for shipping and handling. Then, they’ll ask for your PayPal email address to complete the transaction. 

    At this point, if you choose to accept the offer, you will soon receive an email from PayPal saying that the money is being held (in escrow service) until the shipping company is paid, with a link to said shipping company. 

    This is all fake. 

    The email was fabricated with a fake link, and if you decide to send the extra money to this “shipping company,” you will soon find that your PayPal account did not get the money from your vehicle sale. 

    Now, you’ve also been scammed out of whatever amount the fake shipping company asked for. 

    2. The “guaranteed sale” scam

    When you list your vehicle on a site like Craigslist, eBay, or Facebook Marketplace you may get a call from an unknown phone number or email saying that your vehicle is being viewed by many potential car buyers. 

    The message continues by saying that all you need to do is deposit X amount of money — usually a few hundred dollars — into an account associated with the site in order to guarantee a sale in the next 30-90 days, or you will get your money back. 

    These sites do not provide such a service. Report it immediately.

    3. The used car identity theft scam

    Scammers may be on the lookout not only to steal money from vehicle sellers, but also steal sensitive information from them as well. 

    While your vehicle's VIN number is public information, buyers do not require other personal information in order to complete a sale. 

    They may attempt to gain more of your personal information through typical questioning that occurs during the transaction. If the buyer seems more concerned with your financial institutions, credit cards, and bank accounts than they do with your vehicle, avoid them.

    For ease of mind, consider a fraud monitoring service that will alert you right away if someone is trying to make purchases using your stolen information. 

    Aura fraud alert monitoring
    [Image source: Aura Fraud Monitoring]

    4. The phony trade scam

    You may sometimes receive offers to trade your vehicle for a vehicle with a significant market value. 

    These vehicles are typically stolen or salvaged, and may even have their titles fabricated or changed to help disguise their true condition.

    If an offer seems too good to be true, it's probably a scam. 

    Scammers may attempt to appear more legitimate by letting you test drive their vehicle, in exchange for test driving yours. At this point, when driving their vehicle you might notice no apparent signs of damage or concern, providing you with a false sense of security. 

    Some scammers have been known to drive off with the victim's vehicle after asking to test drive it, while the victim test drives the salvaged or stolen car. 

    It should go without saying, but never give anyone access to your vehicle if you aren't in the vehicle with them. 

    5. The trade-in credit scam

    Another variation of the phony trade scam occurs when the scammers offer trade-in credit at an established auto dealer for your vehicle —much more than what you would get if you went to the dealer yourself. 

    In similar fashion to the PayPal scam, the scammer will send you a very legitimate looking webpage for the dealer, and claim that the credit has been added to an account which you can use at your discretion. 

    If you were to try using this credit, however, you would find that it’s fake, and your vehicle is stolen. 

    Stick to cash transactions when possible, or meet up with your buyer at a bank to verify the legitimacy of any cheque they are offering for the sale.

    Avoid Car Title Scams

    Buying and selling used vehicles can be stressful. There’s a lot of money at stake and the last thing you want is to get scammed on such a huge purchase or sale. 

    Take the time to inspect a used vehicle’s title for signs of fraud or tampering. Check the VIN online and try to meet the seller at the DMV to make sure everything is above board. 

    With a bit of extra due diligence you can be sure the great deal you found is really worth it.

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    1. Financial identity theft and fraud
    2. Medical identity theft
    3. Child identity theft
    4. Elder fraud and estate identity theft
    5. “Friendly” or familial identity theft
    6. Employment identity theft
    7. Criminal identity theft
    8. Tax identity theft
    9. Unemployment and government benefits identity theft
    10. Synthetic identity theft
    11. Identity cloning
    12. Account takeovers (social media, email, etc.)
    13. Social Security number identity theft
    14. Biometric ID theft
    15. Crypto account takeovers