Car sellers can also find themselves scammed, even if they havent sold their car.
The scam is similar to the ones that trick buyers looking for bargain cars aboard: a foreign buyer responds to a UK advert offering to pay for the car and shipping costs up front. They send a cheque and it appears to clear, but the buyer then e-mails to say that they cant complete the sale. They ask for a refund to be sent for the full amount, minus a generous goodwill gesture.
The refund is sent and quickly cashed, but the original cheque turns out to be a fake, and the sellers bank then wants the money back leaving the seller out of pocket.
You can combat fake bankers drafts, bouncing cheques or a potentially fraudulent foreign buyer by waiting six full business days for the funds to clear. Under banking rules introduced in 2007, youre guaranteed that the bank has no comeback if the buyers cheque later turns out to be fraudulent. CHAPS (Clearing House Automated Payment System) payments or direct money transfers are safest when selling. Its quick, and youll know that the money is real once its in your account.
Should you go Escrow?
Money transfer and escrow companies arent that common in the UK, so theyre easy for criminals to exploit buyers. Escrow is a method of holding a payment in trust until the car has been delivered.
Its not a bad system, but you must be sure that youre really dealing with a legitimate escrow company and that the person collecting the cash is who he says he is. Money transfer companies are just as susceptible to abuse, and the use of forged passports and identification documents means that anyone could walk in and collect the money.