Let's Not Make a Deal

How a Network of Car Sales Sites Is Confusing Consumers

Robertson Barrett
Special to Consumer Reports WebWatch

Edmund Jimenez was trolling the Web recently, looking for an easy way to put his wife's car on the market. So he typed some keywords into a search engine, and up popped an apparent solution: the US Car Network.

"Looking for an easy way to sell your car??" the site said. "Look no further!! Hungry Car Buyers Want To Buy!!"

The proposition was enticing, in theory: While established sites like Autobytel and Yahoo! charge $25 to $75 to run an ad for three weeks, US Car Network would charge nothing to advertise the car to "buyers nationwide," taking an advertising fee only if the vehicle sold.

But almost everything else about the US Car Network raised Jimenez's suspicions. The "List Your Car" page asked for full credit-card information up front. The advertising fee was listed as 1 percent in one place, 3 percent in another. Most telling, there were no car listings anywhere on the site, and no easily accessible information about the company itself, where it was located, or who owned it.

Jimenez, a resident of Woodland, Wash., was experiencing an increasingly common predicament for online consumers: How to find a reliable merchant or service on the Web when explosive growth in Internet usage has encouraged thousands of entrepreneurs to try their hands at e-commerce.

A Closer Look

Often, no-name Web sites turn up in search-engine results right alongside the big-name brands. Type "sell my car" into Google, for instance, and you get autoseekandsell.com, sellcar.net, hotautodeal.com and hundreds of others. (The paid-listings section, presumably the preserve of major brands, includes plenty of obscure sponsors such as fastcashforcars.com.)

Even the legitimate merchants among them — or the Web marketing firms that build and operate their Web sites — can be slapdash in their online practices, providing only vague guarantees of promised transactions before asking for credit-card or other personal information.

A Consumer Reports WebWatch examination of the US Car Network shows just how bewildering the situation can be for online consumers.

Major consumer organizations, including Consumer Reports WebWatch, agree that online merchants should clearly disclose their physical location, telephone number or e-mail address, and ownership. But a Web search for US Car Networks revealed dozens of US Car Network sites, each with the e-mail address or phone number of a different person, and no written information about the company that operates the sites.

There are, however, links at the bottom of each home page to a streaming audio or video message from Dean Graziosi, the president of Motor Millions, a Tempe, Ariz., marketing firm that advertises a $59.95 sales kit on televised infomercials.

Jimi Taft, Motor Millions' director of compliance, says the company includes a customized "US Car Network" site with each TV package sold, but charges extra to list that online storefront with major search engines so someone will see it. When would-be car sellers enter their information on one of these sites, Taft explains, Motor Millions shares the data with a private network of used car dealers. If one of them buys the car, the Web storefront "owner" gets an undisclosed piece of Motor Millions' fee.

In other words, people actually pay to become members of Motor Millions' online sales force. The result for consumers is hundreds of car sales sites that appear to be independent and don't include any substantive information on the company that operates them.

Motor Millions has generated no negative record with the Better Business Bureau other than the occasional complaint about slow refunds. But Audri Lanford, co-editor of Internet Scambusters, a popular online newsletter, says that with so little information, consumers have no clear way of distinguishing such sites from "shell auctions," online scams whose sole purpose is to get money or credit card numbers from unwary buyers.

Lanford says the sales operation also uses a business model known as "multi-level marketing," a practice that has been closely watched by the Federal Trade Commission. It's legal for a company to recruit one level of "distributors" (the storefronts), but illegal in most states to pay people commissions for recruiting other recruiters (the classic "pyramid scheme").

"These are basically companies, like Amway, that have lots of people out there selling," Lanford says. "When their pitch focuses more on a business opportunity than on a product they're selling, they're more likely to be a scam. Many also have a high up-front fee to get involved. You have to buy a month of some service, or a distributor's kit."

Moving Right Along

If it takes more than a click or two to find the official Web site of a trusted brand name or thorough contact information for the firm, that's reason enough for consumers to be extremely wary of any deal they encounter through Web sites or unsolicited e-mail. If there's any doubt, prospective shoppers can check the Better Business Bureau Online's state-by-state database to see whether a business is registered, meets consumer guidelines or has generated complaints.

But many businesses aren't on the BBB's list, and puzzled consumers like Edmund Jimenez arguably shouldn't have to become sleuths just to find a legitimate service on the Internet.

Steven A. Salter, director of operations and administration for BBBOnline, suggests this alternative: Next time, start at BBBOnline's Safe Shopping Site, which lists more than 14,700 approved online businesses and is adding 500 new ones a month.

It's far from perfect. Without category listings, it takes awhile to sort through the alphabetical directory to find Automotive.com, which discloses all kinds of reassuring corporate information. And it doesn't make you sit through a streaming infomercial to find out who's buying your car.

Online Shopping Tips:
Consumer Reports WebWatch Guidelines: http://www.consumerwebwatch.com/bestpractices
BBBOnline Shopping Tips: https://www.bbbonline.org/OnlineShopTips/seller.asp
National Consumers League's "Be E-Wise: How to Shop Safely Online," in PDF format: http://www.nclnet.org/eWise2.pdf

Company Search:
Better Business Bureau Company Search: http://search.bbb.org

More on Scams:
Federal Trade Commission: E-Commerce & the Internet: http://www.ftc.gov/bcp/menu-internet.htm
Internet Fraud Watch:http://www.fraud.org
Internet Scambusters Newsletter: http://www.scambusters.org
National Association of Attorneys General: http://www.naag.org/issues/issue-consumer.php

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.