Big, Bad Banking Scam
By MIKA BRZEZINSKI, CBS

11/2/2002

Jeff and Shawn Mosch were looking to sell their '61 Buick special.

So when they got a buyer, they were delighted. But as CBS News Correspondent Mika Brzezinski reports, the buyer was in Africa. That left the couple a little leery of his payment plan.

"Basically he told me there was a person in the states that owed him $8.800," said Jeff Mosch.

To make things easier, the African buyer said he would have that person, who was in Pennsylvania, send the $8,800 directly to the Moschs in Minneapolis. They would deduct the price of the car, $1,600, and then send along the balance to the buyer in Africa -- $7200. Sure enough, a cashier's check came in the mail.

But Shawn wanted to be sure, so she went to the bank and said, "I need to know when this is going to be a good clear check. When this is going to be actual money I can spend and it's never going to come back and bite me in the butt."

And she was told, "24 hours ma'am, no problem."

Feeling reassured, the Mosch's wired the balance to their buyer.

But a week later, the check came up as counterfeit, and the Mosch's were left holding the bag.

"$7,200 ... that's a lot of money," says Jeff.








The scammer was taking advantage of not only the victim but also the banking system -- specifically, the process by which checks are cleared. The con artists get their money before the banks discover their checks are bogus.

Susan Grant, with the National Fraud Information Center, cautions, "Just because the money is available for you to use doesn't mean the check is good."

That's because when a check is deposited, a bank first makes the money available to the customer, often in one or two days. After that, the check is sent back to its original bank. Only then is it verified -- which could take weeks.

The bottom line: if the check is bad, the burden is on the customer.

Nessa Feddis of the American Bankers Association says, "Customers, when they accept a check from a stranger, they need to exercise some caution."

And lots of it, because this scam comes in all shapes and sizes and is spreading throughout the country.

As for Moschs, Shawn says she feels more anger towards the bank than the scammer.

The bank told them today they have to pay up. And the car?

"It's still for sale, but cash only," they say.

Growing Used Car Scam

Here's a used car scam that is growing very quickly right now: Scammers are getting more clever about putting counterfeit vehicle identification numbers (VINs) on stolen cars and trucks.

Even experienced used car dealers can now be fooled.

This is an important used car scam for you to know about, since cars with these counterfeit VINs could be seized by police and other authorities, and you'd be out the money you paid for the used car.

Action: First, check the VIN plate for peeling, color problems, or any other sign that the VIN plate may not be right. If you think there could be a problem, don't buy the car.

In addition, CarFax is an excellent resource for checking and tracing the make, model and background of a used car. Make sure the description of the car matches the car you are considering purchasing. This is a very worthwhile step to take before buying a used car. Visit CarFax now.

ODOMETER FRAUD

What is odometer fraud?

Odometer fraud occurs when someone gives a false statement in disclosing the mileage of a vehicle. According to the American Automobile Association (AAA) odometer fraud is a serious threat to used car buyers that can cost thousands of dollars in frustrating breakdowns and repairs. The difference in value of an average vehicle with 30,000 miles and 70,000 miles is approximately $3,600. When increased finance and repair costs are added, the loss to a consumer who purchases a vehicle with an altered odometer is considerable.

AAA further notes that the very nature of the used car market makes it fertile territory for fraud. The vehicle can change hands several times before reaching the used car lot and fraud can happen at almost any step in the process. Unscrupulous operators can commit fraud by changing the odometer reading, cleaning the vehicle to make it appear to an untrained eye that the vehicle has been driven fewer miles, and sometimes washing the title (having a new, lower mileage title issued in a state which allows this to occur).

Used cars with five digit odometers which have rolled over can have mileage untruthfully disclosed at the number of miles appearing on the odometer (e.g., 50,000 miles) when the vehicle has in fact been driven one hundred thousand or more miles further (e.g., 150,000 miles).

How can I identify odometer fraud?

Unless you are trained, you probably cannot identify if the mileage shown on the odometer is accurate. Before purchasing a used car, take it to a mechanic for an inspection. If the seller will not allow you to do so, beware.

Consumers are vulnerable to fraudulent used car sales

State motor vehicle agencies are warning Congress that consumers are vulnerable to fraudulent used car sales, especially in the wake of flood damage from the Gulf Coast Hurricanes.

Karen Chappell, deputy commissioner of the Virginia Department of Motor Vehicles, told the Senate Commerce, Science and Transportation Subcommittee on Consumer Affairs, Product Safety and Insurance, that as many as 500,000 vehicles were damaged by Hurricanes Katrina and Rita.

"Consumers deserve real-time and reliable access to the title histories of any motor vehicle they plan to buy," said Chappell. "And buyers and sellers need to know how each state defines all vehicle brands, including salvage, junk and flood."

As part of the Anti-Car Theft Act, state DMVs and the American Association of Motor Vehicle Administrators (AAMVA), developed a national online, real-time motor vehicle history system. Chappell said a U.S. Department of Justice cost-benefit analysis indicated this system has the potential to save consumers from $4 billion to $11.3 billion annually.

But due to lack of federal funding, the system currently serves only 52 percent of the U.S. vehicle population.

"Motor vehicle fraud costs consumers billions of dollars a year with life threatening consequences," said Chappell.

"It endangers human life by putting unsafe vehicles back onto our roads, and title fraud dupes hard-working consumers into buying vehicles that look good on paper, but are not safe or reliable."

She said criminals can easily exploit the loopholes in varying state vehicle "branding" definitions. Vehicle brands, such as flood, non-repairable or salvage, can get lost in the transfer from state to state. This expunges the past histories of motor vehicles. And this lack of consistency leaves the consumer at a major disadvantage when purchasing a new or used motor vehicle.

AAMVA has supported a number of efforts to help establish national salvage branding legislation to eliminate these inconsistencies and protect consumers. But to date, none have been successful.

In the absence of federal legislation, many states have enacted additional laws or strengthened existing laws governing the titling or branding of salvage vehicles.