In Search of the $500 Humvee
Don't Expect Free Rides from Auto Auction Sites
Special to Consumer Reports WebWatch
Jill Hufft wanted to buy a car at the lowest possible price, so last month, the Fresno, Calif., resident tried searching for deals on the Web. Almost immediately, Hufft came across CheapCarFinder.com, which promised striking discounts on all makes and models – "Up to 90% Off Book Value!" – if she didn’t mind buying a repossessed vehicle at auction.
"Every month, 1000s of cars become government & bank property through various seizure/surplus laws," the site explains. "Because of the constant influx of vehicles and the enormous expense to store them, the cars must be sold fast and cheap! Buy direct from the sources and save considerably! Bids on new and used repossessed and fleet vehicles start as low as $100!"
CheapCarFinder.com is one of dozens of "auction guide" sites that regularly advertise on search engines and Web directories. Unlike CarsDirect.com, eBay Motors and other online marketplaces for new and used vehicles, auction guide sites claim to offer consumers steep savings by directing them to government and private auctions of seized vehicles in the consumer’s home state.
But, as Hufft found, many of these sites fail to provide a corporate address, phone number and clear disclosures of what they do with personal and credit-card information – which conflict with e-commerce practices recommended by consumer organizations and the Federal Trade Commission (FTC).
For example, CheapCarFinder.com, allowed Hufft to search for available cars by ZIP code but asked her to pay a one-time $35 subscription fee with a credit card before seeing specifics about the cars or any information on how to buy them. The site lists its owner as the Airon Corporation, with a suite address in Miami, but gives no phone number or additional corporate details. "I really need a car at a low price," Hufft says. "But at the same time I can't afford to lose money to a scam."
Airon Corporation, in fact, has an "unsatisfactory" record with the Better Business Bureau (BBB) of Southeast Florida due to unanswered complaints. What's more, Consumer Reports WebWatch could not verify any of the seven personal testimonials listed on CheapCarFinder.com.
"I got my truck for less than 3 grand in outstanding condition, it was a very well maintained government owned vehicle," says "William Beeman of Manchester, NH," in one testimonial in which he claims he saved almost $14,000 on a Ford Expedition. "I'm in your debt for pointing me in the right direction! Thank you."
Like the six other names on CheapCarFinder.com's testimonials page, William Beeman was not listed in the White Pages as a resident of his alleged hometown. Moreover, his name and quotation appear word-for-word on car message boards of at least two unrelated Web sites (sysindia.com, webmaine.com), and his comments don't specifically mention CheapCarFinder.com as the service being praised. Airon Corporation did not return emails from Consumer Reports WebWatch asking company president Eric Gjerde to discuss the company's record and site testimonials.
Promises at a Premium
Steve Baker, director of the FTC's Midwest Region, says the commission discovered numerous online auction guide sites in recent years that had serious lapses in acceptable online sales practices – including obtaining consumers' credit-card information under false pretenses, such as claiming they needed it to verify an order. Or the guides faked orders: "In phone sales they’d say, 'Can I throw in a guide to government-foreclosed homes?'" Baker says. "The customers thought it was free, but they were charged for it."
But the FTC and BBB agencies say the more widespread problem for consumers is fraudulent or deceptive marketing by auction guide companies – a trend since 2001 that has caused both organizations to issue warnings and take legal action.
"We have sued several of them," Baker says. "The idea has been that the government gets these cars from drug lords, and these folks advertise and say 'We know where these cars are, and you can get them for next to nothing, and we'll sell you a guide telling you where the auctions are.' In some cases, they said they knew of close-by auctions and they didn’t. One auctioneer called us and said, 'I'm getting calls every day from people who want these "drug lord" cars, but I don’t sell them.' But his name was in the guides."
Consumers need to be aware of a final, related issue: Auction guide sites, like CheapCarFinder.com, don't make it clear that much or most of their information is available free elsewhere. Samantha Donaldson, a consumer education specialist with the federal General Services Administration (GSA), which conducts many of the government’s seized property auctions, says the agency offers extensive listings of its auctions at FirstGov.gov (www.firstgov.gov), the U.S. government's official Web portal, as well as on other sites and in newspaper announcements. (For more information, see sidebar.)
Some prominent auction guide sellers argue consumers are in fact getting a crucial service when they plunk down a monthly fee.
"All auctions aren’t controlled by a single federal source – there are state, county and police," says Bill Keck, CEO of PoliceAuctions.com, a major auction guide with a positive BBB record based in California. "There are literally thousands of government entities that control these. We actually make the phone calls to some of the smaller state and local auctions that don't have the wherewithal to list themselves on the Web."
A major auctioneer disagreed. Roger Ernst, whose namesake company runs California's largest auction of seized vehicles, says most government property ends up at a few big auctions that consumers can easily find without paying for guides. On the West Coast, for example, Ernst says most auction listings can be found on his site and that of his only major rival, Nationwide Auction Systems. "Most of the rest of what you'll get [from pay auction guides] are little guys who have police-seized goods, but very few cars. They say 'cars,' but one definition of 'cars' is two."
Whether consumers pay for the auction guides, can they expect to get a $200 SUV?
Only in rare circumstances, according to Keck and several other auction guide sellers interviewed by Consumer Reports WebWatch. Instead, agencies that seize vehicles, such as the U.S. Customs Service, say consumers usually pay at least wholesale prices by the time bidding ends.
Similarly, the GSA's Donaldson says her agency, which manages the auctions of federal surplus vehicles, takes pains to manage bidders' expectations: "There are no giveaways. GSA expects to receive a fair market price."
If you want to buy an auction guide, the FTC recommends that you:
- Understand seized vehicles are rarely sold at the bargain prices promised by many auction guide advertisements;
- Check the name and location of the company with your local Better Business Bureau (www.bbb.org) before buying;
- Use your credit card to pay for an auction guide, because it offers greater protections than other forms of payment if you seek a refund.
Sidebar: Get It For Free
Before paying a subscription fee to an auction guide company, the Federal Trade Commission recommends bargain-hunters consult several resources for free (or cheaper) auto listings:
- Government auction programs. These opportunities are sometimes advertised on radio and television.
- Classifieds or business sections of newspapers. The dailies and trade papers like Commerce Business Daily often publish information about upcoming sales.
- Local libraries or chambers of commerce. These sources may maintain auction guide subscriptions.
- The General Services Administration (GSA). The GSA, a federal agency, offers free listings of upcoming GSA Fleet Auctions online at http://www.autoauctions.gsa.gov.
- The Federal Citizen Information Center (FCIC). The FCIC, a branch of the U.S. GSA's Office of Citizen Services and Communications, has several free or low-cost federal publications available online (www.pueblo.gsa.gov). See the FCIC's Guide to Federal Government Sales (http://www.pueblo.gsa.gov/cic_text/fed_prog/fedsales
/fedsales.htm) for practical consumer tips about federal government sales programs.
- FirstGov.gov. The U.S. government's official Web portal contains information about government auto auctions. From the homepage, click on "Shop Government Auctions," which connects users to the "Shopping and Auctions" page (http://www.firstgov.gov/shopping/shopping.shtml).
- Other government sites. See the Web sites of federal agencies that seize and sell vehicles:
Government auction guides are also available free of charge on Web sites of many state and local law enforcement agencies.
Robertson Barrett, a media consultant and writer, was a founder and managing editor of TIME.com and ABCNEWS.com. He was also vice president and general manager of The FeedRoom, a nationwide broadband news network in partnership with NBC and Tribune, and of Channel One Interactive, the educational television network's new media division.
He writes a biweekly column on scams and schemes online ans has written about spyware and Internet "washers" for Consumer Reports WebWatch.