How to steer clear of fraud when buying a used car

This first step you can do even before you meet the seller. Whether you’re buying a used car from a car dealer or from someone you think might be selling cars to make money, find out if they’re licensed. Under BC law, selling even one vehicle as a business activity requires a dealer licence. 

Dealer licences are regulated by the Vehicle Sales Authority of BC. If someone is not licensed when they should be, this is a huge warning flag. As well, licensed dealers must follow strict standards, and you’re more protected when buying from one. 

Whether you're buying from a car dealer or privately, look into the seller’s track record. Google their name combined with the word reviews or complaints. 

If you're buying from a private seller, be on the lookout for any signs that something is amiss. Some people pose as private sellers when they're actually in the business of selling cars (and so should be licensed). Here are examples of warning signs that someone might be a curber:

• the seller says they’re selling the car on behalf of a friend or family member 

• the seller asks to meet at a parking lot or somewhere other than their home

• the seller's phone number is listed in multiple ads for cars for sale

When you’re buying a used car, it’s always important to give the inside and the outside a thorough inspection and take a test drive to make sure the car is in the same condition as the seller is advertising. ICBC has a detailed checklist of what to look for. Here are two things to pay special attention to.

Check the vehicle identification number

Make sure the vehicle identification number on the car — known as the VIN — matches the number on the vehicle registration form. The most common places to find the VIN are on the dashboard or the inside door panel on the driver’s side.

Check that the VIN has not been tampered with. Look for loose rivets, scratched numbers, glue or tape. If the VIN has been tampered with, it’s a sign the vehicle may have been stolen.

Check for odometer rollbacks

Look at the actual odometer.

• Do all the numbers line up?

• Is there any evidence of sabotage (scratches, cracks) in and around the odometer?

• Does the wear and tear of the vehicle show more use than the mileage indicates?

Particularly if you’re buying a car from a private seller, it’s important to check for liens. A lien is a legal claim made on property to make sure someone pays a debt. Liens are attached to a vehicle, not to its owner. If a vehicle has a lien on it and the previous owner fails to pay a debt, the lien holder can take the vehicle from you as payment.

In BC, liens are registered in the personal property registry in Victoria. For $10, you can search for liens, as long as you have the car’s VIN (vehicle identification number).  

You can get Canada-wide lien information, which includes BC results, by ordering a CARFAX vehicle history report (for $45 to $65). These reports contain other helpful information, such as whether the car has previously been in an accident, its repair history, and the last reported odometer reading.

One of the best ways to protect yourself from problems with the car itself is to have an independent, licensed mechanic inspect the car. An independent inspection usually costs around $100 to $200, depending on the mechanic and the extent of the inspection. 

If the seller is resisting having an independent inspection done (“the car’s in great shape; I just had it fully checked out!”), that’s often a red flag. Insist that you get an inspection done. As a consumer, it’s your right to have an independent inspection.

The seller may ask you to provide a deposit or sign an offer to purchase prior to having the car inspected. You can insist that any deposit you make be refundable and that any documentation say you are not bound to go through with the sale until you approve the results of the inspection.

Never agree to pay for the car upfront or send money via wire transfer. While a small deposit can be a great way to let the seller know you’re serious about buying the car, don’t hand over the full amount to the seller until the day the car is ready to go home with you.

If the seller requests an escrow service (a third party that acts as a go-between you and the seller), investigate the service to make sure it’s legitimate and secure. Many online escrow sites are fraudulent.

Learn more about how to protect yourself when buying a used car.