May 12, 2006 -- Experts estimate 80 percent of the used cars in classified ads are not being advertised by individual owners, and that can mean trouble for buyers who aren't careful. Cars parked by the side of the road with "For Sale" signs are even more suspect. Chances are, a lot of these cars are being sold by "curbstoners," and you'd be wise to avoid them at all costs.
Curbstoners are illegal, unlicensed used car dealers who sell cars from the "curb" rather than from a dealership. They usually pretend the cars are their personal vehicles. Many curbstoner cars are salvage vehicles. Others are too dangerous to drive, and some could even be stolen. If you are duped, the curbstoner is likely to be long gone by the time you figure out you've bought a lemon.
Reese F. got two trucks for the price of one -- but this was no bargain. The Ford Truck he bought from a seller in a Taco Bell parking lot for $15,000 turned out to be two totaled trucks welded together. The seller had told him he was helping his brother sell the truck and that his brother bought it new from a Ford dealership. When Reese found out the frame was hopelessly twisted, he couldn't exactly go back to the Taco Bell to find the curbstoner. And when Reese decided to sell the truck, by law he had to disclose to the next buyer that the vehicle was a mess. Needless to say, he lost thousands of dollars on the deal.
When I've investigated curbstoning in the past, I've easily found odometer rollbacks, salt and rust damage, flooded vehicles and salvage vehicles. All my team did was scan the classifieds for duplicate phone numbers and look for cars for sale by the side of the road.
Many illegal dealers are getting more aggressive with their marketing. Some strip mall parking lots have come to look like used car dealerships. We spotted one with dozens of cars lined up, all for sale. The malls are so inundated with curbstoners that they've started posting signs that say "no car sales allowed." One day we spotted a car for sale right next to one of those signs!
If you have any doubt that curbstoning can be big business, think about this: I went undercover and found one curbstoner with a 25-car inventory. That's expensive to maintain. He had been at it for years and lived in a mansion in one of the most exclusive counties in the country.
Curbstoning is infuriating to legitimate licensed used car dealers. After all, they pay taxes and pay for the property where they display their cars. They can't compete with illegal dealers who don't follow the rules. Occasionally a licensed car salesman will cross the line and become a curbstoner, selling cars on the side and taking business away from the dealership where he's employed. Most states have laws that make it illegal to sell more than five or six cars a year without a dealer license.
To Be a Savvy Consumer:
Know the Signs:
Do Your Homework:
Where to complain:
If you have already been victimized by a curbstoner, contact your state and county consumer protection agencies and the Department of Motor Vehicles to file a complaint. If you're lucky, government watchdogs will investigate, but the chances of recovering your money are slim.
In the wake of last year's devastating hurricanes, it's more important now than ever to look out for curbstoners. Hurricane Katrina damaged or destroyed 600,000 cars, and chances are many of them will be marketed to unsuspecting consumers by these illegal, unlicensed dealers. And a program note: Watch my segment next week on "Good Morning America," where I show you how to spot a flood-damaged vehicle -- even if the seller has gone to great lengths to hide the telltale signs.