Public warned about fraudsters in online car auction scam
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Fraudsters are tricking would-be buyers to part with huge amounts of money in deposits in order to reserve vehicles that are mostly unrealistically priced, and in reality, do not even exist.
While social media platforms such as Facebook have become a powerful tool in modern-day auctioneers’ marketing arsenals, it has also opened an all-new field of attack for the scammers who have become adept at copying well-known auctioneers’ corporate identities and swindling well-meaning buyers out of their hard-earned money.
In response to the recent spate of incidents recorded across the country the South African Institute of Auctioneers has issued a caution to its members to be vigilant of the new scam and warned online bidders to verify auctioneers’ details before interacting or making online payments to them.
The organisation’s Sonja Styger said unfortunately it was a growing trend due to the exploding popularity of online auctions driven largely by the Covid-19 lockdown.
One of the latest victims, a Mpumalanga resident who wishes to remain anonymous, said her hope of obtaining her dream car was shattered when it turned out to be a scam.
"The so-called repossessed car auctions are advertising everywhere these days. I have been watching these adverts for a while now, and what drew me to them were their low prices for cars that would normally cost hundreds of thousands of rands - or so I thought.
"When my dream car popped up the other day at under R100 000, I was never to miss the chance. I immediately contacted the ’salesman’. The car was available at their base in Sandton and as beautiful as it was in the pictures.
“I registered interest and was told it had been reserved for me and no more advertised. I had already envisaged that after the first deal, I would buy lots of cars from them and resell at a profit. He mentioned this was a great idea that would mean guaranteed money in commissions for him.
"Two other managers then called me to confirm my interest in the car. Auctions don't work like conventional car showrooms, they said. I needed to pay 50% to reserve the car, then it would be delivered, after which I would have 21 days to determine if I liked it or not. I would then pay the balance or return the car and get a refund. Looking back, it sounded too good to be true.”
As she was told she must pay or risk losing the car, she did deposit the amount required. "Alarm bells were already ringing in my head. But this sounded genuine and the name is that of a reputable auctioneer. Nothing could go wrong. Reluctantly, I went to the bank and make cash deposit of 50 percent of the price of the car.
“The moment I walked out of the bank, I knew I had committed a terrible mistake. I went back in to try and cancel, but the money had already been withdrawn.”
She was later called by a woman to say another client who had the full amount wanted the car and that if she still needed it, she had to pay the balance straight away.
“I refused. My ’salesman’ then came back to me. He expressed disappointment and offered a refund. He asked for my bank account. I gave it to him, and in no time, three transactions had been made off my account.
"He then called back to say they were a huge operation and that no one would catch them... They used names, addresses and logos of reputable companies and operated all over the country... He also said if I looked properly I would have seen the cars were brand new while the interiors were of used cars, and that the pictures were taken from dealerships all over the world, and others downloaded.
“He said I was so desperate for the car that he felt sorry for me, but added that ‘a man has to do what a man has to do'. He wished me well, and moments later, the phone was no longer in service.”
The woman said she did not open a case with the SAPS, as she knew the chances of getting her money back, were zero.
“Hopefully, by creating enough awareness, potential car buyers will know better than to do business with these crooks.”
Gauteng SAPS spokesperson Captain Kay Makhubele said while he knew about the scam, he did not offhand know about any cases lodged that had been opened.
Private investigator Mike Bolhuis said this was a clear case of a “knock and scam”.
“Cars are one of the biggest scams in our country as people are always looking for them at a good price. It's big and it's even getting bigger.”
Bolhuis said the problem was that people believed everything they saw on social media; when they see the word auction, they believe they are going to get a bargain.
“There is no such thing as a bargain anymore... People must also stop handing over their money before they have evaluated the institution selling the product and have seen and inspected the item they want to purchase.”
He warned that people would pay in a blink of the eye three quarters of the price of a car which did not even exist.
Bolhuis said most of these people did not report the scam to the police, but urged them to do so, for the authorities to obtain the statistics.
Styger meanwhile explained that the scammer used a number of techniques, including cloning of legitimate auctioneers websites and social media pages, with changed contact details and fake imagery depicting cars or any other asset they may choose.
“Unfortunately scamsters choose popular car makes and attach pricing information that is just too good to be true. This is done to lure potential buyers in and prompt them to make contact. They request the potential buyers to pay a large deposit ranging between 30 and 50% of the selling price into their bank account to reserve the vehicle.
“Once the deposit is paid they disappear with the money and no trace of them or the vehicle.”
She warned that potential buyers must take precautions before paying any fees to an auctioneer or car dealer without first checking their credentials.
At no time whatsoever would auctioneers require a deposit for viewing purposes, or to reserve a vehicle; they would however require a refundable deposit to register to bid at the auction.
The scamsters changed their tricks often enough to remain ahead of the game, she warned.
– If it looks too good to be true, it probably is and should be treated with heightened scepticism. Next, if the web pages only give cellphone contact information or a web email address such as gmail.com, it should raise the alarm.
– Likewise, if more information cannot be found on the item in question via a quick Google search then think twice about pursuing it and find out more.
– Look up reviews about the company; best, do not pay any money until you are satisfied that it is legitimate.
– Almost all of the scammers detected make use of a Capitec Bank account.
– An auctioneer will never require a deposit from you to inspect or view a car.
– If an auctioneer receives an instruction to auction any item they have to proceed with the auction and sell on auction, they cannot and will not reserve the vehicle (item) for anyone or sell outside of the auction.
– An auctioneer will only require you to pay a refundable registration deposit to participate in an auction. Furthermore, there is no rent-to-buy option with auctioneers.