Scammers are always looking for ways to get the most money out of individuals and businesses, and unfortunately, dealerships are not immune to their efforts. Title lien fraud is one of the biggest concerns for dealers and consumers to be aware of when buying and selling used cars. Getting wrapped up in a scam can cost everyone — except the scammer — thousands of dollars over a single vehicle.
Understanding lien basics, various fraud methods, and safeguards you can implement in your business is the key difference between being prepared and being vulnerable.
Lien Basics
A title lien is a safeguard placed on the vehicle’s title to ensure any interested lenders will receive what they are due. The most common liens are:
Three Common Methods of Fraud
Title lien fraud happens when a vehicle with an outstanding lien is sold without the lender’s knowledge or consent, leaving the purchaser liable for unpaid debts. Here are some common methods scammers use to deceive buyers:
Safeguards for Your Business
To protect your business, use real-time motor vehicle records to verify vehicle title statuses. Look for vendors that provide NMVTIS searches as well as state-specific records. Being aware of any potential red flags when buying and selling used vehicles will help avoid later headaches dealing with liens, fees, and legal roadblocks.