How to steer clear of fraud when buying a used car

“When I bought a used car privately last year, everything went so smoothly. The car drove great, my mechanic gave it the thumbs up, the price was good. Then a month after the sale, a bailiff showed up to tow my car away. Turns out the seller had stopped making payments on their car loan, and the lender had a lien on the car (my car!) that I didn't know about. I had no idea a lender could just take the car even though I didn’t owe them a cent.”

– William, Richmond, BC

British Columbians are twice as likely to buy a used vehicle as to buy a new one. There are some compelling reasons why (it’s cheaper!). But there are also more risks when buying used, especially when buying from a private seller. Whoever you’re buying from, here are six steps you can take to reduce the chances of being a victim of fraud when buying a used car.

How to protect against fraud

Step 1. Verify the seller is licensed

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

Search the registry of licensed dealers

You can search the Vehicle Sales Authority's registry of licensed dealers in BC by dealership or salesperson. The registry shows if someone has a dealer licence, and whether there are any restrictions on it.

Step 2. Take other steps to make sure the seller is legit 

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

One way to spot an untrustworthy seller

If you’re buying privately, here’s a way you can verify that the seller is the true owner of the car. Ask to see a piece of the seller’s ID (such as a driver’s licence), as well as the original vehicle registration form (not a photocopy). Check the information on the vehicle registration form. Does the owner’s name match the seller’s name on their ID? Does the address information match the location of the sale? If either doesn’t match, ask why.

Step 3. When inspecting the car, check the VIN and odometer

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 $40 to $60). 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.

Step 5. Get an independent inspection

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.

Step 6. Don't pay before you get the car

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.

  • Reviewed for legal accuracy in October 2022
  • This information applies to British Columbia, Canada
  • Time to read: 5 minutes

Reviewed for legal accuracy by

Mario Garcia, CarbonCure Technologies

Mario Garcia

Also on this topic

Work it out

Buying a used car: How to protect yourself

Need to know

Leasing a car

Work it out

Buying a used car: Closing the sale

Work it out

Problem with a car repair

Work it out

Template letter to complain about used car (private sale)

Work it out

Problem with a used car bought from a private seller

Work it out

Problem with a used car bought from a dealer

Work it out

Template agreement for sale of a used car

Webinar

Buying a Used Car in British Columbia

Still not sure what to do?

If you're looking for advice specific to your situation, there are options for free or low-cost help.

Options for legal help