Latest Threat to Carbuyer Safety: The Evil of 'Curbstoning'

April 21, 2010

Have you heard of "curbstoning"? We hadn't, and we like to think we're up on new automotive trends.

But if the National Automobile Dealers Association has its way, you will. Curbstoning, you see, is a dangerous threat to used-car buyers, who put themselves and their families in dire peril by buying from anyone other than a used-car dealer.

You know, that friendly guy in the checked sports coat who has your best interests at heart.

Curbstoning, says NADA, is the "fraudulent and potentially dangerous practice" of "repeated buying and selling of vehicles for profit by a person posing as a private seller who does not have a dealer license."

Used car and truck ads on Craigslist New York

Used car and truck ads on Craigslist New York

Empty Auto Dealership

Empty Auto Dealership

Empty dealership interior

Empty dealership interior

1929 Used Car Promo

1929 Used Car Promo

1936 Used Car Lot Quincy MA

1936 Used Car Lot Quincy MA

Internet feeding ground

The press release includes into a familiar trope: The Internet provides a "lucrative feeding ground" for the evil curbstoners. And these days, for the Internet, read "Craigslist".

But what exactly is this threat? Curbstoners "often" sell cars that have "severe damage or defects hidden beneath a freshly polished exterior."

"Hidden damage could be structural, mechanical or even electronic, which is often harder to detect,” says David Hyatt, NADA vice president of public affairs.

“Nowadays, it’s not just a bent frame used car shoppers have to watch out for," he goes on. "It could be a flood-damaged vehicle, a faulty computer connection and sensor or an empty airbag module that pose safety hazards.”

The implication: Vehicles from legit used-car dealers have none of these problems, but those offered by so-called curbstoners do.

Used cars: Dealer profit center

Here, it's worth pointing out that if you have a used car to sell, you will almost always make more money by selling it yourself to a private party than by selling it or trading it in to a dealer.

Car dealers these days make very little money selling new cars. Their two profit centers are repairs and used cars. In other words, they make margins on used cars they can only dream of making on the new cars that bring in their service customers.

Three to five a year is OK

NADA notes that some states limit private sellers to three to five vehicles a year before they must register as used-car dealers. Ah, but evil curbstoners evade that limit by not taking title to the cars they sell, posing "as relatives or friends of the owner."

To avoid thoroughly pissing off consumers who sell their own cars, Chuck Redden--president of AutoTec, which works with states and municipalities to track car dealer licenses--rather grudgingly clarifies the definition of a curbstoner.

“It’s not the guy putting a ‘for sale’ sign on his own car," Redden says. "It’s the guy with different cars on Craigslist every week." In that case, "you don’t find out there’s a problem until it’s too late. Your money is gone and you have no recourse.”

"Concerned" parties to the rescue

Again, unlike your friendly neighborhood used-car dealer, who will of course gladly refund your money even in the absence of consumer protection laws to curb the well-documented abuses of (a small number of) car dealers.

But fear not. "Concerned corporations and organizations within the automotive industry," including NADA, are rushing to the rescue, with a nationwide "Stop Curbstoning" campaign to "take action against this growing problem."

Their website offers information for consumers, dealers, and municipalities. You can also follow it on Twitter if you like.

All about access to information

The campaign was founded by AutoTec, which sells AuctionACCESS, a product it calls "the automotive remarketing industry standard for managing dealer access to wholesale auto auctions."

In other words, a company that gives cars dealers access to wholesale auto auctions (from which the public is prohibited) wants to make life more difficult for private sellers who compete with its customers.

In the good old days, it cost used-car sellers $15 to $50 for a classified ad, and newspapers were neither searchable nor sortable. Now, Craigslist ads are free, and reach hundreds of millions of people on both sides of the transaction.

Buyers can even exclude all ads placed by dealers, searching only vehicles from private sellers. We call that reducing market friction by using information technology. (And caveat emptor still applies.) But we understand why used-car dealers might bitch.

Frankly, we're surprised it took them this long.

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