Police have launched an investigation and AutoTrader has bolstered its security settings after overseas scammers swindled Kiwis out of tens of thousands of dollars through the New Zealand-owned online car marketplace.
The scammers have seen success by offering vehicles at cheaper prices than other private listings, but convincing buyers the trade is genuine by providing detailed information, photos and official-looking documentation for the cars.
Their elaborate lies are made all the more believable by being willing to answer questions and speak over the phone, creating fake IP addresses that make it appear as though they're in New Zealand and listing cars that legally belong to other people so they pass a stolen vehicle check.
One Auckland couple described the scheme as "flawless".
Police were first made aware of an issue when this couple reported on August 9 that a 2013 Toyota RAV-4 GXL they'd bought for $10,000 a week prior hadn't been delivered as promised.
Police have now been notified of another couple, in Hamilton, who bought a 2013 Holden Colorado off AutoTrader that also never arrived. After their $12,500 outlay, they too went to police and were allegedly told as many as 10 others had been targeted in similar scams.
As the matter is under investigation, police wouldn't comment on potential links to the alleged Hamilton cases, but confirmed it was looking into the Auckland couple's case.
The human cost of the scam
For the Auckland couple who first reported the scam, the loss of $10,000 is a bitter pill to swallow.
"That's a good chunk of money to lose, but especially because my partner's on maternity leave. $10,000 to anyone's a lot of money to lose," one of them told Newshub.
"We were trying to buy a second car, which we need for when we're both back at work, and a safe car for my baby. That's the worst part - you feel like you're stealing from your child."
He says the loss of $10,000 has compounded what has already been a difficult year, blighted by severe anxiety, multiple surgeries, two COVID-19 lockdowns and the stresses of becoming parents for the first time.
In addition to the thousands of dollars they've lost, he's also worried that the personal information he passed over to scammers in the transaction may be used to steal his identity.
The incident has rattled him so much that he's now put cameras up around his house, put a note on his mail to stop anyone changing his postal details, and made checks on his credit rating. It's also why he opted not to be named in this article.
He regrets buying the car, but says nothing but the price set alarm bells ringing. He says the seller's explanation for selling the car was convincing and elaborate, and all the communication and exchange of documents was done by the book, up until the money was transferred.
The seller also provided evidence of a New Zealand address, the listed car passed a stolen vehicle test, and the scammer was even willing to speak to him on the phone to discuss the purchase.
"This was not an obvious scam. As much as everyone sits back and goes 'oh that's obvious', this is a next-level scam," he said. "It was flawless."
The couple only became aware that something may be wrong when someone claiming to be their truck driver contacted them to say they'd broken down, delaying the delivery of their car by two to three days.
When they went back to the original seller for confirmation, he was gone - unable to be contacted via phone or email.
Why putting a stop to the scams isn't straight-forward
AutoTrader managing director Ross Logue told Newshub that the company has now recreated its private listings portal and updated the security settings on its website in response to the wave of new scams.
He explained that the scammers appear to have been timing the creation of their fake accounts and false listings for Friday nights. He believes they do this deliberately, in the knowledge AutoTrader's capacity to respond is reduced due to the closure of its office over the weekend.
"It takes some time [to track fake accounts down], and over the weekend we have to get our third-party developers to get onto the site and locate them."
This setting was altered on Tuesday morning to allow Logue and other staff remove scam listings themselves, rather than needing to go through their developers.
Logue says about ten fake listings were put up on Friday, August 2 and approximately another ten a week later, on August 9. He says that's "not a huge amount when you're looking at 26,000 listings".
One of the challenges with shutting down scam listings before users agree to a trade is that the scammers are from all over the world, so AutoTrader has to locate particular countries and IP addresses to block.
"It's a difficult one because you can change your IP address to New Zealand but can be based wherever - Korea, Nigeria, Russia - so there's an issue with overcoming that, but we're aware of the issue and have made a lot of changes to fix it."
AutoTrader is also looking into a solution to the use of stolen credit card information with its payment partners.
"What happens is you get stolen credit card information, and you can see on the payment portal that they're trying different credit cards - so they might get four failed payments, and then get one right," Logue said.
"So we're working on flagging that and then blocking future attempts - but obviously you've got to take into account user error."
How to avoid falling for a similar scam
While Logue feels for the Auckland couple, he believes there were some red flags they missed. He says crucially, they made the final transaction through Ebay Australia, which is something AutoTrader expressly recommends not to do.
"There was no contact [with the seller], it was from a different country and through a different payment portal," he said.
In a blog post on its website, AutoTrader advises against falling for the 'too good to be true ad'.
It says would-be buyers should immediately be suspicious if a vehicle is advertised at a very low price, and should always cross-check information on the internet and find out exactly who they're dealing with.
It also advises Kiwis to never agree to deposit money in a bank account unless completely sure the ad and seller are legitimate, and to avoid paying for goods via any sort of international money transfer, as these transactions cannot be traced.