Avoiding Being a Victim of Classic Car Hobby Fraud

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Cliff Murray
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Avoiding Being a Victim of Classic Car Hobby Fraud

#1 Post by Cliff Murray » Sat Nov 06, 2021 11:57 am

Avoiding Being a Victim of Classic Car Hobby Fraud


It’s hard to believe that the classic car hobby is so attractive to crooks but it is and you need to keep that in mind whenever you buy or sell anything. The targeted items can be broken down into two main groups, vehicles and everything else.

“Everything else” includes just that, anything that is not a vehicle, literature, parts, tools, signs, anything but a vehicle. Most of the scammers that we encounter are quite clever. It is their profession and if they want to eat they have to let you think that they are nice people. They are likely to act a little stupid like maybe they want to sell all their parts for half of market value. Maybe they know that you are anxious to tell your buddies what a smoking great deal you got on that rare part? The primary tool of the confidence man is their ability to put you at ease in a way that makes you do things that you regret in retrospect. Looking back you will feel like an idiot for sending them money or parts or whatever it is that they cheated you out of.

To avoid being cheated you must not become emotionally attached to the transaction. You must control the pace of the transaction and do not allow the other party to speed up the process thereby making you do things before it is prudent to take that action. You have to assume that every transaction you make is being done with a crook.

When selling something wait until you have the money before shipping the item. “Money” is not a check, not even a bank check. A check is only money when it has cleared and certified bank checks are very often counterfeit. Cash is money if it is not counterfeit. PayPal is money but buyers and sellers should note that the payments are subject to dispute and may be reversed. PayPal Friends and Family can not be disputed, a big difference.

When buying you have a lot to think about. The seller wants money and you have no proof that they have what they claim they will ship you. Maybe you should ask for references. Car clubs may have members living near the seller or they may know the seller from the local hobby activities. It is best to be suspicious when an item is too cheap or the seller is hyped up anxious to sell. You can ask the seller if there is some other way that he can give proof of his identity but realistically buying things online from private individuals is a leap of faith. Vet the seller the best that you can and cross your fingers.

Buying and selling cars is just as dangerous but mistakes are much more costly. Based on the laws in many parts of the country, cars with modified serial numbers may be confiscated and go to the crusher to be destroyed. In cases where the original number can be determined the car may be returned to its rightful owner. Legal fees will be added to the total loss of the value of the car. “Owning” a car with a modified serial number can cause a gigantic financial loss.

Every make and model of classic car has some people among its ranks that are quite good at spotting counterfeit vehicles however even those people can be fooled. Taking the Porsche 356 as an example there were 70,000 cars produced by Porsche. The values of those cars today, in very good condition, range from $50,000 to more than a million dollars. Obviously this creates a situation where it makes financial sense to spend time and money to make the $50k car into something much more valuable.

Of the 70,000 cars made tens of thousands of cars have been destroyed and no longer exist. That has created a massive pool of “available” serial numbers to assign to stollen cars. We don’t know exactly how many Porsche 356s have been stollen over the decades but we can be certain that many have been stollen and renumbered and that the last thing that you want to do with your money is to buy one of those.

Recently there was a real world example in the Porsche 356 community. A 1962 356 Cabriolet was put up for auction on the Pcarmarket website. The seller owned the car for four years and wanted to sell to concentrate on his 1962 356 Twin Grill Roadster. The first sign of trouble with the car’s authenticity was a re-stamped engine serial number. That number looked suspect but the proof was that the engine type number stamped by Porsche was not used until 1964 and 1965. The engine number was undeniably fake. “Matching numbers” in the Porsche world has a very large financial impact on the value of the car making a difference of thousands of dollars. That discovery lead to giving the entire car a much harder look. Pictures in the ad showed a problem with the main serial number stamped into the raised section of the trunk floor. This raised section was not welded into the floor by the factory but rather formed when the floor was pressed in the die. On this 1962 Cabriolet the pictures appeared to show some grinding mark where a weld was smoothed out. When the seller was asked to remove the right side door hinge cover to view the “secret” number stamped at the factory it showed a number for a different 356 Cabriolet. Furthermore, the lids and doors were stamped with partial numbers matching the secret number, not the main number stamped into the floor which was the number on the title. This counterfeit fake Cabriolet was bought this way by the current owner and he can’t sell the car as it is. The men he bought it from will not return his calls. One man, acting as a sales agent, was an employee of a 356 restoration shop where he showed the car to its current owner. The other man was the previous owner of the car.

There are no good solutions to recovering your money once you have been defrauded. Lawyers are expensive and the legal system moves very slowly. You won’t enjoy the notoriety of being cheated while the crook is likely to remain anonymous because he doesn’t exist or the long drawn out legal battle will get worse if you are found to have libeled the crook if found not guilty.

Here is the only advice that I can come up with right now. Do not trust anybody or take anything at face value. Remove every doubt that you may have about the other party or the item involved. The Porsche 356 Registry is a great resource to vet people or items before continuing with a transaction. Unfortunately the Porsche 356 Registry is also a great place to try to cheat 356 owners. There is no way to reduce the risk of fraud to zero but you have to try even though you may get burned anyway. Do not get emotionally attached to a transaction and control the pace of the transaction to your satisfaction.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#2 Post by Chuck Allard » Sat Nov 06, 2021 12:21 pm

Sound advice. Thank you.

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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#3 Post by Wes Bender » Sat Nov 06, 2021 12:24 pm

Great write-up Cliff!
Some days it's just not worth chewing through the restraints.....

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Cliff Murray
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#4 Post by Cliff Murray » Sat Nov 06, 2021 3:20 pm

Wes Bender wrote:
Sat Nov 06, 2021 12:24 pm
Great write-up Cliff!
Thank you.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#5 Post by Graeme Langford » Sat Nov 06, 2021 3:41 pm

Thank you for taking the time to post this Cliff. Very informative. It is a bloody mine field out there
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#6 Post by Mark Roth » Sat Nov 06, 2021 3:48 pm

Excellent post, Cliff.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#7 Post by Martin Benade » Sat Nov 06, 2021 4:11 pm

I think it is informative and helpful and doesn’t set any legal land mines for the Registry.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#8 Post by Mark Roth » Sat Nov 06, 2021 5:12 pm

To illustrate Cliff's post here are some engine number stamping tools offered for sale that I found on the internet.
Porsche stamps 1.jpg
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Ebay add for renumbering.jpg
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Here's the car Cliff was describing. I download the web images, converted it to PDF and then to JPEG so please excuse the quality. I took out the pages that identified the seller and the irrelevant photos.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#9 Post by Jerry Powell » Sat Nov 06, 2021 6:46 pm

Perfect article for the magazine Cliff.

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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#10 Post by Glen Getchell » Sat Nov 06, 2021 7:18 pm

I would like to add to Cliff's excellent post. However, I would like to focus on the "Wire Transfer", which many feel is the golden option for moving money. For all of you out there that believe a wire transfer is as good as cash, or like the movies where every one watches in suspense as the money is transferred culminating in the 100% showing on the computer screen which then has the watchers jumping for joy as the money is now in their accounts. Well I'm here to scare the living bejesus out of you because that's a myth. Hollywood magic.

I have sold three valuable Porsches to Europe and used wire transfers as the method for payment. Any one of these deals going south could have been life altering, so to say that I was very cautious and yes scared would be an understatement. This caused me to do an incredible amount of research on wire transfers, much of it with my Bank "Wells Fargo" who in fact was educated on the subject at the very same time I was; because yes, they too believed in the "wire transfer myth".

When I approached the Bank Manager about wire transfers she told me they are as good as cash. I had already learned enough to know this was not the case and indicated that I had heard differently as a friend had had one reversed. She started making calls and went higher up the food chain in the bank. Over a period of numerous days I was told that the wire transfer was as good as cash once it was in your account. Then was told that was not correct, that a transfer can be reversed, but not after you have removed the money from your account. Then the bank manager called back and said, that actually the transfer can still be reversed, but all parties would have to approve it. Then the bank manager again called me up and said the previous information was incorrect and that wire transfers can be reversed but only for a couple of days so try to hold on to the car for a couple of days after the transfer (she knew I was selling a Porsche). She then again called me back to say she was wrong, and that a wire transfer can be reversed for longer than a couple of days. And if you move the money they banks will track it an reverse it or remove it from other funds. She told me to hold on to the car as long as I can. I asked her how long. She said, "Just hold it as long as you possibly can." Apparently the longer between the transfers and the reversal, the less chance it will or can be reversed.

So in short a wire transfer is no safer than a legit check. "It can be reversed." You are not "Golden" if you use a wire transfer. And if that money is from Europe, and car has left, you are screwed. Oh, and let me just add this little bit more to keep you awake at night. If you sell a car, receive a wire transfer (or check), deliver the car, and then the funds are reversed on you, don't bother calling your insurance co. They did not steal your car! You sold them the car. They "stole your money"! And that my friends is not insured.

What I ended up doing (and honestly I can not believe the buyers agreed to this) was I said that I would not release the car for 10 "work days" after the transfer cleared. I would tell them that they were more then welcome to come and handcuff themselves to the car during those 10 days, and that I would even feed them. But that car was not leaving the garage for 10 days nor was I handing over a title. If I was the buyer I don't think I would agree. But I can live with not spending tens to hundred's of thousand of dollars easier than I can with loosing it.

Abide by Cliff's advice. Assume every one is a crook, and get educated about how money moves. Oh, and also Cliff is exactly right about the legal system moving slow. I had a 356 related law suite that last 8 years.

Glen
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#11 Post by Jim Liberty » Sat Nov 06, 2021 7:57 pm

After decades in the hobby, I was scammed earlier this year. Disregarded my own "Law" (Buy the seller before you buy the item). I succumbed to several of Cliff's warnings. Lost my money, never got the item. ...................Jim.
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#12 Post by Phil Planck » Sat Nov 06, 2021 8:12 pm

Great contribution Glen
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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#13 Post by Cliff Murray » Sat Nov 06, 2021 10:52 pm

Hi Glen, Thank you for speaking up. I will call my commercial banker this week to investigate what you say. I do have some doubts about your advice. At my business we don't take wire transfers every day but we have taken many over the years. I have also taken a few for payment on cars that I have sold personally. My banker of 20 years absolutely assured me that once you see the money in your account it can not be reversed by the sender and I have never had a problem related to a wire transfer. I will look into it again though.

I did get burned over 20 years ago by taking a "treasurers check" as payment for a brand new Yamaha ATV. I was covered for part of the loss by my business insurance but it still cost me money. The guy was slick. He called the shop a couple of times over the previous week to negotiate price and ask questions, just like a normal customer. Then he showed up around 5pm when the banks are closing. He presented the official check to make the purchase. In those days the banks would confirm to merchants that adequate funds were available to cover a check you were taking. I was suspicious of this character so I called the bank, just caught them before they left, faxed a copy of the check, they said the check was good, we gave the customer the machine, took down the license number of the truck, and that was that. Until the next morning when the bank called us back to say that they had made a mistake and that the check was a modified copy of one of their Treasurer's checks. Too late! We were able to find that the truck was rented 30 miles away in Philadelphia but the police would not investigate. We sell hundreds of vehicles a year and so far that is the only time we were screwed but motorcycle shops are big targets for fraud and break-ins(we have had some of those) because there is a big market in the big cities where gangsters don't care about murder much less riding stollen vehicles.
1957 Speedster
1959 Sunroof
1960 Devin D Porsche racer
1963 GS2133 Coupe
1967 911S
2003 575M
Various vintage motorcycles

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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#14 Post by Glen Getchell » Sun Nov 07, 2021 1:16 am

Cliff Murray wrote:
Sat Nov 06, 2021 10:52 pm
Hi Glen, Thank you for speaking up. I will call my commercial banker this week to investigate what you say. I do have some doubts about your advice. At my business we don't take wire transfers every day but we have taken many over the years. I have also taken a few for payment on cars that I have sold personally. My banker of 20 years absolutely assured me that once you see the money in your account it can not be reversed by the sender and I have never had a problem related to a wire transfer. I will look into it again though.

I
Cliff, I'll be interested to see what your banker says. But if he says the funds are secure, again question him if he is absolutely sure that it is "impossible" not just difficult or rare, or is he making an assumption (ask him if he would personally insure the money?). Like I said, the bankers I talked to thought it was too, until they started a deep dive into the subject. Also make sure that you as a commercial entity don't have some protections that the average Joe wouldn't have. Also I will admit that I am making an assumption that all wire transfers are reversible, but I was dealing with international funds, not a wire transfer from within the states. Now with that said I have one Porsche friend who had a transfer from France reversed (not selling a car)(He was the one who alerted me to the issue), and a Lawyer friend (who may or may not be reading this as he is a 356 guy) that confirmed what I said and knows some one who lost six digits believing that the Wire Transfer is safe. Could I be wrong? Always a possibility as I am not a banker. All I can do is believe those who have told / warned me it can / has happened, and to pass along info that took nearly a week of research, several trips to the branch, and numerous phone calls with a very large bank which I have a personal and business relationship revealed.

As to the insurance issue about claiming your car was stolen if your a wire transfer is reversed. What I wrote was almost a direct quote from a higher up at Hagerty.

Glen
64Cx2
P.S. I should add that the reason that my bankers started to investigate the wire transfer issue deeper was that when they told me that it was a good as cash and could not be reversed I asked them for that in writing (as I had already been warned its not). When they refused, I asked why they would refuse if the money was safe as they claimed? They actually wondered the same thing. That just started the snow ball down the hill that ended up with the complete reversal of what the bank had initially stated regarding wire transfers.

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Re: Avoiding Being a Victim of Classic Car Hobby Fraud

#15 Post by chris romney » Sun Nov 07, 2021 10:18 pm

I think Jim's advice of "buy the seller" is a good place to start. Personally, I don't buy parts online from someone I don't know, or who isn't well known in the 356 community. Most scammers try to do something to create a sense of urgency, thereby getting you out of your usual habit patterns. Usually it's something like a too cheap price on a part which will make you hurry up and drop your guard. You should never be in a hurry, or fail to vet a buyer/seller if you don't know them. Although it may not always be accurate, I always check and see how long a buyer/seller has been a Registry member. If they are new, I generally avoid them.

Regarding Glen's post about reversible wire transfers, I'm going to have to do some research. A wire is a one way street and once the money has left the sender's account it can't be simply reversed and pulled back the other direction to the sender. Once in your account, a bank can't just take the funds from your account without just cause such as fraud or theft. Assuming you are a legitimate owner and seller of Porsche parts or cars you shouldn't have anything to worry about. Glen, did your banker detail the circumstances under which money which was already deposited in your account would be withdrawn? Having said this, it's probably not a bad idea to have a "3 day cooling off period" where the money sits in your account just to be safe. Such preconditions will also probably help scare fraudsters off.

When selling I don't take anything but wire transfers and PayPal friends and family. Everything else including cashiers checks is subject to fraud.

Chris
 

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