Tangled Web

Tangled Web

While buying vehicles online may be convenient, new challenges arise

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Be Cautious Online

Paula Shaw, Executive Director, Tennessee Motor Vehicle Commission

The internet has become a vast forum for vehicle sales. This new marketplace will incorporate an increased utilization of technology, digital applications and social media platforms. The formats will be used to reach a broader audience and brings with it both opportunities and challenges for the industry.

Protecting consumers in a digital environment presents many new challenges for DMVs and licensing agencies, since it is often difficult to identify the location of the seller. Without this knowledge, it is difficult to determine venue when a dispute arises between the seller and purchaser. It is particularly difficult to protect the consuming public when neither the true identity nor the location of the seller is identifiable. Purchasers likely will not know how or where to seek help from government agencies when problems arise.

Additionally, it is challenging and sometimes impossible to determine legitimate promotions from those presented by scammers. The prevalence of scammers has created an environment rife for consumer fraud where legitimate businesses find it difficult to compete and where consumer protection agencies have difficulty regulating.

Personal or private seller transactions have also been impacted by the use of the digital environment. While using online platforms to sell or purchase a vehicle helps the public reach a broader market and selection, it also exposes consumers to individuals looking to prey upon them.

Both sellers and purchasers can be victimized when they fail to take steps to ensure that they are actually receiving what they think they are purchasing. In a photo, it is easy to hide physical damage, mileage history, mechanical soundness and actual ownership. Unfortunately, unsuspecting citizens are willing to transfer large funds for products that they have not seen and that may never arrive.

AAMVA has started compiling a best practices document in order to help with these issues. The Internet Vehicle Sales Working Group has placed the focus of the best practices document on protecting the consumer and creating a level playing field. By taking this approach, the group has been able to identify the vulnerabilities in the current environment and to formulate recommendations that not only address them but are customizable to the current statutory environments of the different jurisdictions. It was important to the group to recognize what is already working well in the current environment without compromising their existing integrity and offer recommendations that build on these structures.

As with most DMV initiatives, financial resource availability and support from government agencies/leaders, legislative bodies and industry can consistently be anticipated as challenges to successful implementation. The good news is that the group has received widespread interest in the development of the best practices document and broad support for its development.

With Ease Comes Increased Awareness

Jim Walker, Director of Government and Business Operations, New Jersey Motor Vehicle Commission

Online vehicle sales have created a tool whereby small vehicle dealerships have become or have the potential to become multi-state dealers. This allows them the ability to reach out to a much larger consumer base. It’s been a challenge for regulating agencies because now there’s a greater possibility that consumers from other jurisdictions are affected by a purchase made by a dealer that you’ve licensed. And the same goes for some of our residents who may come to us about an experience they’ve had with a dealer who’s not located in our state. It becomes a little more difficult for them to resolve a problem.

I think consumers are still catching up with what it means to purchase a vehicle from a dealer in another state. Although, by and large, the bulk of their purchases are probably taking place with dealers located in the consumer’s own state, in which case they certainly have a more direct avenue if they’ve got a problem or a complaint.

Another challenge of buying a vehicle online comes not through actual licensed dealers, but rather through individuals via websites like Craigslist. Someone selling on the internet as a private seller might really be a licensed dealer, or they might be someone who’s an unlicensed dealer. (We call them an unlicensed dealer because they may sell a sufficient number of vehicles to be required to have a license, but they have not obtained one or applied for one.) The consumer can be at a disadvantage if he or she is not buying from a neighbor, but rather unknowingly buying from a professional car salesman.

The consumer certainly has a greater ease of purchasing when going online to a website like Craigslist. There are a wide variety of filters. Back in the old days of newspaper ads, things were sorted by car manufacturer, at best. Now you can search for cars in numerous ways and your conversations with the seller can consist entirely of text messages and emails back and forth to gather more information about the vehicle.  There is a certain lack of sales pressure shopping online. The internet also easily provides a vehicle’s history.

When you look at a website like Craigslist, for instance, you can see that there are about 10,000 vehicles for sale at any one time in the state of New Jersey by private owners. And, there are also nearly as many vehicles being advertised on Craigslist by people who identified themselves as dealers. This is just Craigslist alone. There are many other [vehicle sale] websites, like Cars.com, CarGurus, etc. for the consumer to search through as well.

The buying experience today in some ways is a lot easier for the consumer, however, it has increased buyer risk. With the AAMVA Internet Vehicle Sales Working Group, we’re trying to remind consumers to stay vigilant and be aware of who is trying to sell you a vehicle and to adjust your purchasing process accordingly.

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