Tennessee Warns Against Auto Scams: Protect Your Vehicle Sale

The Tennessee Department of Commerce & Insurance (TDCI) has issued a warning about a rise in auto-related scams targeting individuals selling vehicles on platforms like Facebook Marketplace. These scams involve fraudulent buyers tricking sellers into relinquishing their vehicles without receiving legitimate payment, highlighting a significant risk management issue for sellers.

The fraudulent scheme typically sees a potential buyer contacting the seller, agreeing on a price, and even visiting the seller’s bank under the pretense of completing the transaction. However, the payment method, such as a counterfeit cashier's check or fake wire transfer, often turns out to be illegitimate. Once the seller hands over the vehicle, they realize the transaction was a scam, leaving them without both the car and a valid payment.

TDCI Commissioner Carter Lawrence emphasized the importance of understanding insurance policies, as most do not cover theft under fraudulent circumstances where owners voluntarily hand over their keys. "It's vital for consumers to read their auto insurance policies carefully to know what scenarios are covered," Lawrence noted, stressing the need for regulatory compliance in understanding insurance coverage terms.

TDCI offers several risk mitigation tips for sellers. When dealing with cashier’s checks, verifying the check's authenticity directly with the issuing bank is essential. Sellers should consider meeting prospective buyers at their bank to confirm available funds, thereby preventing fraud. For wire transfers, it is advisable to wait until funds are securely deposited and verified before transferring ownership of the vehicle.

Running vehicle history checks through the National Motor Vehicle Title Information System (NMVTIS) and services like CARFAX can assist in verifying a car's history and title legitimacy. Sellers should engage with licensed motor vehicle dealers or salespersons to ensure genuine transactions. TDCI encourages reporting any deceptive practices to the Tennessee Attorney General’s Division of Consumer Affairs, underscoring the importance of deliberation and rigorous buyer verification to minimize the risk of scams.