Beware Curbstoners: Dealers Who Sell Used Cars as Private Sellers

Used Cars Sold on the Curb Can Present Lots of Headaches from Dishonest Sellers

Curbstoners are dishonest used car dealers who pretend to be private sellers. Here is how to ID them. Image courtesy of suphakit73 at FreeDigitalPhotos.net

There are individuals out in the used car marketplace who frequently sell used cars from their front yards in an attempt to look like private sellers even though they are used car dealers. They are called curbstoners.

Why would a dealer go through this charade? The primary reason is private sellers have to offer no warranties while used car dealers are bound by used car rules established by the Federal Trade Commission (as well as state and local laws).

They can also fold up their tents and steal off into the night easily because they use cell phone numbers you can't trace.

The FTC publishes a "Dealer's Guide to the Used Car Rule" on its website. As the site says, "Most car dealers who sell used vehicles must comply with the Federal Trade Commission's (FTC's) Used Car Rule. In fact, car dealers who sell more than five used vehicles in a 12-month period must comply with the Rule."

Dealers will sell cars in their front yards because it exempts them from the used car rules. By the way, don't think of dealers as new car dealers with used car franchises. These are smaller dealers, such as the folks who offer "Buy Here Pay Here" deals. They will sell good cars they buy at auction on their used car lots.

It's the other cars they sell in their front yards you have to worry about. As the National Auto Dealer Association points out on its website, "[T}he Internet provides a lucrative feeding ground for "curbstoners," or used car sellers posing as private parties to sell cars that often have severe damage or defects hidden beneath a freshly polished exterior.

Curbstoning is the repeated buying and selling of vehicles for profit by a person posing as a private seller who does not have a dealer license.

The NADA also points out, "[M]any states limit the number of vehicles private parties can sell in a year before they have to register as used car dealers. In most states, that number is three to five cars or trucks a year." To avoid this, the curbstoners won't take title to the cars they are selling.

The curbstoners will say things like the car is their mother's, their son who is away in the army, anything they can to explain why their name is not on the title.

Chuck Redden, president of AutoTec has this good advice about curbstoners: "It's not the guy putting a 'for sale' sign on his own car. It's the guy with different cars on Craigslist every week. With a curbstoner, you don't find out there's a problem until it's too late. Your money is gone and you have no recourse." AutoTec works closely with states and municipalities to track dealer licenses.

How can you tell if a person is a curbstoner? Here are some tips:

  • Google the person's name. If it comes up with more than two used car references, be wary.
  • As mentioned above, the seller's name is not on the title.
  • An old looking "For Sale" sign on the car. Let's face it. Curbstoners are all about squeezing out maximum profits. They're too cheap to pay for new "for sale" signs so they will just reuse them.
  • A private seller will allow you to do a CarFax report on the car. A curbstoner won't because the report will detail that the vehicle was sold at auction.
  • A curbstoner is also not going to let you have the car independently inspected. They're also not going to be able to provide you with maintenance records that match the car.

    Check out my Ten Questions To Ask a Private Seller for more tips on dealing with legitimate as well as illegitimate curbstoners.

    AutoTec has developed a website called "Stop Curbstoning" that you can check out. It offers two brilliant pieces of advice that I wish I could take credit for:

    • A quick Internet search for the phone number listed on a car or classified ad will reveal whether that phone number has been used recently in the sale of other vehicles. If it has - beware!
    • When you call, one smart gambit is to say, "I'm calling about the car." If the seller replies, "Which car?" - then you have to ask yourself how many private parties have more than one car for sale.
    • By the way, AutoTec agrees that you should ask for the maintenance records, as well as some of the other tips I outline.