Car scams are on the rise, warns online auto retailer

With a surge in car sales during the spring and summer months, a local auto retailer said this comes with a rise in vehicle scams. 

The Canadian auto retailer — Clutch — recently launched in Ottawa and is raising red flags over concerning auto market trends. 

The online retailer said they have built software around fraud detection and prevention, in efforts to identify cars that may be stolen.

Last month, the company found that roughly one in 300 vehicles that passed through their system was stolen, Clutch CEO, Dan Park, said.

He said a recent statistic shows that one car is stolen every six minutes in Canada — which is an estimated 7,000 cars per month.

“It’s become a real problem,” Park said. “Scammers and fraudsters are becoming more and more sophisticated and so I think the general public needs to be more sophisticated.”

According to Park, there are several strategies consumers can use to protect themselves from vehicle scams.

“When you’re buying a car privately, there’s generally no recourse if that purchase goes sideways,” he said.

The first step is ensuring the Vehicle Identification Number (VIN) matches the number shown in the Used Vehicle Information Package (UVIP), which contains an automobile’s history, liens, and other important information. Any inconsistencies could indicate the VIN has been altered.

“Fraudsters are able to forge the VIN on cars and so people should be making sure the VIN matches on every part of the car,” he explained. “Typically you’ll see the VIN on the ownership, windshield, and door jam.”

UVIP can also tell a potential buyer whether the car has been flipped recently. A recently purchased car that is now for sale can be a red flag, said Park.

“If the car has been owned for two weeks or a month, generally that means something is fishy and consumers should be aware that this could be a stolen vehicle,” he noted.

If the vehicle’s history shows the car has recently been exported to the U.S., this is another warning sign.

According to Park, cars don’t often return once they leave the country — and fraudsters can use the VIN of the exported vehicle and forge this number on a stolen vehicle.

While he said there are number of factors contributing to the rise in vehicle fraud, scammers should face more consequences, working to disincentivize this type of criminal activity.

“I think the incentives for fraudsters is high — they can make five to $10,000 from stealing a car and there’s not a lot of recourse there,” Park said.

The online auto retailer explained that the safest route for potential car buyers would be through a dealership or entity registered with the Ontario Motor Vehicle Industry Council (OVIC).

“OMVIC has setup recourse and protections to protect against fraud,” he said. “Consumers can check the OMVIC website to find their retailer and this can indicate whether they are legitimate.”

OMVIC’s Motor Vehicle Dealer Compensation Fund reimburses eligible car buyers who have suffered financial loss related to a vehicle purchase, lease or consignment transaction, he said.

Clutch said they had a meeting recently with senior-level government officials — working to leverage some of their technology, in efforts to catch falsified registrations and provide more consumer protection.

“When the New York Times starts writing articles about why Ontario is a hotbed for vehicle theft, this flags a serious problem,” said Park.