Understanding and Preventing Car Sale Scams in Canada and the US

Deal is for fools

A North American expert on automotive fraud, Maxim Shelkov, notes that online advertisements have appeared offering car owners a chance to earn extra income. The lure is simple: invite a buyer to view the car and sign a so-called sale contract that looks legitimate, yet leads to real consequences.

Advertisers typically require a car from 2017 or newer and promise a monthly wage ranging from 300,000 to 600,000 rubles. The ads claim the job is easy and demands no heavy labor or mental strain.

In practice, a naive seller follows instructions given by a so‑called supervisor over the phone, shows the car to the buyer, and signs a sales contract. Only later does the seller realize that the arrangement was not a harmless listing, but a real trap.

double shot

Phone scammers can cost a car owner the vehicle itself. The attackers often target people who have already fallen for similar tricks and transferred money to strangers’ accounts.

To gain trust, the fraudsters pretend to be investigators who claim involvement in exposing criminals who previously stole from the same victim. The ruse is that the owner must sell the car to these impersonators, under a fictitious arrangement.

In reality, criminals sell the car to potential buyers on behalf of the owner. A Russian resident faced a similar scheme in November 2023, losing 200,000 rubles and then being persuaded to sell a Toyota Land Cruiser for 730,000 rubles under the pretense of an operation to catch criminals. One supposed contact would say that following every instruction was essential to the operation.

As a result, the car owner granted a general power of attorney to dispose of the vehicle and received 728,000 rubles, which were transferred to accounts controlled by the fraudsters.

wrong choice

Attackers may pose as employees of a car‑selection company to gain a seller’s trust. They promise the existence of a buyer and persuade the owner to transfer the car under a commission agreement in exchange for a small upfront payment for pre‑sale prep.

In Krasnodar, a seller of a Honda for 2.4 million rubles was persuaded by so‑called inspectors to leave the car at their office for maintenance and pre‑sale preparation for a buyer from another city, paid by the seller. The vehicle was transferred under a commission agreement; the owner received a 5% deposit (120,000 rubles). After a while, the scammers cut off contact and the car disappeared. It is reported that 16 cars were defrauded under this scheme, totaling more than 10 million rubles. The scammers also changed office addresses, legal entities, and phone numbers, and used different names.

Experts note that if the intermediary is a legitimate organization, there should be no financial ties with the seller; the seller should handle all payments with the buyer directly. Agencies that rely on automated matching typically charge only service fees to the seller, not commissions with the buyer involved.

Twix

Working in pairs, the scammers may confront the car seller in court later. The aim is to have the seller register the car in one name while the money is paid into another person’s account. This can arise during a discussion or happen by default when the recipient transfers funds from a different bank account.

Afterward, the attacker who owns the account may file a lawsuit against the dealer, accusing the seller of unjust enrichment. The accomplice claims that the money was transferred in cash and that he had nothing to do with the transfer. In such cases, courts can side with the fraudsters, forcing the honest seller to return the money.

To prevent this, cash transactions should be documented with a formal receipt, and for non-cash transfers, the buyer and seller account numbers must be clearly indicated on the documents.

Coin on a string

Another scam uses a fictitious sales contract to seize a buyer’s car. Fraudsters agree on deferred payments among themselves; one registers the car and sells it to the final buyer for the full price.

The first fraudster then sues the second to terminate the fictitious arrangement due to non-payment. The accomplice pleads guilty, the court ends the contract, and the original fraudster buys the car back from the final buyer, sharing the proceeds with the accomplices.

Although the buyer could seek compensation from the second fraudster, the property is usually not registered in that person’s name, and recovery is rarely possible even through bankruptcy proceedings.

Don’t believe the words

Automotive lawyer Lev Voropaev warns that the main rule when selling a car, placing it on commission, or engaging in similar transactions is to scrutinize the documents and not rely on verbal assurances.

To avoid losing a car or missing money, it is essential to study the terms of the contract offered by any consignment store or agency. The integrity of the representative can be checked through online reviews and public databases on the legal status of the entity, but this is not a guarantee. In no case should sellers trust verbal promises. Reading all documents carefully, including small print, is crucial.