Avoiding Car Buying Scams During the Tax Refund Season

Car Buying Scams

With the tax refund season in full swing, everyone is looking to use their extra cash for something worthwhile—to make a worthy purchase.

For many, buying a used car tops their list of purchases during this season. Getting a car is almost a necessity as it takes away many challenges like transportation and ease of movement during emergencies.

That is why making a good purchase is necessary and why you should avoid falling prey to car buying scams. Many auto scammers are also fully aware of the car-buying rush during the tax refund season and are looking to earn money off unsuspecting victims who fall into their traps.

In this article, you will find the necessary information you need to avoid car buying scams and learn some helpful tips on buying a used car without any hassle.

How Common Are Used Car Sale Scams?

Car sale scams are more common than you know. There are so many different types of car buying scams that you can get conned in a heartbeat if you are unaware of them. Auto scammers are professionals and are well-grounded in the tricks they use to defraud victims of their hard-earned money.

One of the best ways to ensure you maximize your money during tax refund season and make a worthy used car purchase is to be one step ahead of the fraudsters. Keep reading to learn more about various types of used car sale scams.

Most Common Types of Fraud and How They Work

Having sound knowledge and up-to-date information about various used car buying processes will help you work your way out of tricky situations with scammers. You will be on high alert and able to back out of any deal that feels too good to be true because you now know what to expect during a purchase.

Check out a few of the most common types of car buying scams.

1.   Financial Fraud

This type of fraud involves being swindled of your money before you even get a glimpse of the car. Usually, there is no car to sell in the first place, just an eager crook looking to scam you of your money. Financial fraud during car purchases occurs in many ways, and you can detect them in different circumstances.

One of the most common types of financial car fraud is the impersonation of trusted dealerships. Many times, scammers like to think ahead of their victims. They know that people looking to buy cars would feel more comfortable buying from a trusted auto dealership, so they set up a fake identity claiming to be one.

They then go a step further, asking you to pay a deposit to secure the car because many other buyers are interested in the same vehicle. This is known as Deposit Fraud. The impersonating dealership prices the car for less than it’s worth, making it a really attractive buy. As soon as you pay into the fake dealership’s account, they disappear.

Another common financial fraud is the Gift Card Scam. This type of fraud is quite dangerous because usually, the money becomes untraceable. When you dial the supposed car dealer’s fake contact number, they request you to pay for the “really good car deal” using a gift card, then send the code to them afterward. As soon as you do this, they go off the grid like they never existed.

2.   Hiding the Repair State of the Car

Many used cars come with some fault… or why else would the owner want to get rid of the car? Beware of any car dealer who claims that the used car you’d like to buy has no damage or need for repair. That is almost always a red flag.

Forget about the good-looking deal; try to find out about underlying costs that you may be on the hook for once you make the purchase.

One of the major car buying scams you should look out for is a manipulated odometer. Odometer fraud is one way auto-dealers alter the true worth of the car to sell a less expensive car at a higher price.

One way to detect this is if the dealer says things like, “I’ve only driven this car a few times, so the mileage is very low.” If the car model is quite old and the mileage on the car reads just a few miles, you should be wary of making that purchase. The mileage on the car should tally with the mileage on the vehicle’s maintenance data.

Another way dealers may scam unsuspecting victims is by Title Washing. Sometimes, cars that have been condemned as salvage or junk are reworked to conceal their true state. Then they are transferred to a new state that doesn’t have a record of the car and issues the car a clean title. You, an unsuspecting buyer, go ahead and purchase a car that has previously been declared useless and unsafe for the price of a perfectly good car.

3.   Selling Stolen Vehicles With Forged Documents

It’s also common practice for auto scammers to use falsified documents to try to sell a car. There are a few ways they can go about this. One is by using a stolen title. Here, they use stolen documents, which they have modified to attempt to sell you a car. If you do not look closely, you will pay for a car without credible documents.

Forging documents is also another way thieves get away with selling stolen vehicles. The dealer creates look-alike documents to fool victims and sell off the cars they have stolen. Others may also claim that they do not have the car’s title on request because it was missing. 

How to Spot a Fraudster

There are certain behaviors and actions you can look out for to spot a car dealer fraudster:

  • They refuse to allow you to inspect the car before purchase.
  • They are in a hurry to sell off the car at a ridiculously low price.
  • They tell you the car has been in a minor accident without offering any further information.
  • They refuse to give you access to check the maintenance records of the car.
  • They prefer to use untraceable methods of payment like gift cards or wire transfers.
  • They request a deposit without any concrete agreement about the car.
  •  They masquerade as private car sellers on Craigslist.

These are only a few ways to spot scammers, but they are the most common hacks fraudsters try to use.

How to Protect Yourself From Car Buying Scams During Tax Season

Use the following tips to help you protect yourself from car buying scams during tax season.

  1. Examine the car carefully before purchase, check all the vitals and take the car on a test drive if necessary. Have an independent mechanic check it out also.
  2. Be sure to get a vehicle history report to check that the car history matches the information the dealer gives you.
  3. Never sign a contract without reviewing it carefully and understanding all it entails.
  4. Ensure that you have copies of all paperwork and documents you have signed because they may come in handy in the future.

What If You Fall Into a Trap?

If you fall victim to a car dealership scam, there’s hope for you yet. You can contact the Better Business Bureau for a fast and effective response. The Bureau will help you get a solution faster than the Consumer Protection Office for your state, which is another way to handle auto dealership scams.

If you fall victim to a private dealer, then you may need to contact a fraud lawyer for help. You may also need to report the incident to the police if you realize that the vehicle is stolen.


If you’re looking to buy a car during tax season, you need to be extra careful. Auto scammers are on the prowl at this time looking for their next victim. Before you make a purchase, ensure that you go over the necessary details and pay attention to possible fraud-related behaviors we have highlighted to avoid regretting your purchase, or, worse, losing your money. 

Patrick Peterson is a writer/editor at AutoDetective. Born and raised in the automotive world. He’s a passionate writer who crafts exquisite content pieces about everything related to cars and bikes.

Avoiding Car Buying Scams During the Tax Refund Season appeared on Wealth Noir.