Old scam called curbstoning gets new life on the Web

By Peter Lewis

Times consumer-affairs reporter

Vehicles parked along the street with a for-sale sign in the window, such as this pickup on Aurora Avenue North earlier this year, are a common sight in Seattle. This practice is taken to an illegal extreme through curbstoning, which is spreading online.

An old racket is getting new life on the Web, and the state is starting to pay attention.

The scam, known as curbstoning, involves commercial car sellers masquerading as private parties. The sellers exploit buyer fervor, naiveté or inability to buy something better, offering vehicles held together with what one investigator described as “saliva.”

Old-economy curbstoners stick “for sale” signs inside cars parked on the street, hence the “curbstoner” label. Some advertise in the classified ads. A growing number favor the Web, where it’s easier for sellers to conceal their identity and location from unsuspecting buyers and the state.

Often the transactions are uneventful, and “most of the people don’t realize they’re dealing with a curbstoner,” said Chuck Foster, the Seattle-based regional manager with the state licensing department.

Similarly, a significant number of those guilty of curbstoning may not realize there’s a law against it, he added. It is illegal to participate in five or more vehicle transactions over a 12-month period without a vehicle-dealer license.

But consumers who sidestep legitimate dealers are at greater risk of having no recourse if something goes wrong and of not getting proper paperwork, including title and registration, state officials said. Getting a handle on the extent of curbstoning is difficult. Foster estimated the practice could account for as many as one in five cars sold outside of a commercial dealership.

That translates to more than 120,000 transactions valued at about $143 million, based on 2004 private-party title transfers.


What it is: Curbstoning is buying, selling or otherwise participating in five or more vehicle transactions over a 12-month period without a vehicle-dealer license. Violations can lead to cease-and-desist orders and fines of up to $1,000 per violation. Hard-core curbstoners are subject to gross-misdemeanor charges punishable by up to a year in jail and a $5,000 fine; repeat offenders can be charged with a felony. More than 20 states have curbstoning laws.

What’s the problem: Curbstoners sometimes misrepresent the background of vehicles. Buyers have little recourse if they are ripped off or fail to receive the title and registration; the state loses taxes and fees.

What’s the state’s record: Criminal prosecutions seldom occur. Statewide, licensing officials could identify fewer than 10 people against whom misdemeanor curbstoning charges have been filed over the past six years, and none who was charged with a felony. In the past two years, administrative action in 46 cases resulted in fines of $158,000. State licensing officials have been trying to crack down on the spread of curbstoning in cyberspace as a result of a case from almost two years ago.

“The issue of sales over the Internet is up and coming and getting more and more prevalent every day,” said Dan Devoe, dealer-services administrator with the licensing department. “We have just scratched the surface.”

Taking the bait

Brian and Melinda Brake of Spokane believed they’d bought a low-mileage, one-owner Bronco in immaculate condition.

“I took one look at it and knew it wasn’t as advertised, but I’d already paid for it,” Brian Brake said.

The eBay ad claimed the 1985 Bronco XLT had one owner and only 36,055 miles. “No rust, original paint in good condition, non-smoker owned, very rare in this condition.”

The Brakes were the winning bidders at $2,750 — a price Melinda Brake thought was in line with the Kelley and NADA book values she’d researched. Including tax and registration fees, the couple paid $3,064.75. What Brian Brake drove away was a Bronco with 93,000 more miles on it than advertised, that “didn’t handle right” and had bad brakes, he said.

Some may scoff at the notion of buying vehicles online, or at not checking out the vehicles beforehand.

But consumers are snapping up vehicles in cyberspace at an astounding rate. According to eBay, an SUV is sold every seven minutes.

Of concern, officials said, is the growing number of suspected online curbstoners exploiting the vulnerable.

While people may be wary of the used-car salesman, they tend to make quick judgments when dealing with individuals. And if the person makes a favorable impression during the e-mail exchanges, they tend to trust him, officials said.

How do they do it?

One way licensing officials learn about potential curbstoner activity is from the State Patrol’s vehicle-inspection program. About 400 times last year, troopers reported the same people kept showing up at inspection stations seeking new titles for cars that insurance companies had classified as totaled.

Curbstoners typically show up at auctions held at towing companies and wrecking yards to troll for vehicles. Licensing investigator Sotero Rambayon said curbstoners “buy wrecked vehicles and put them together with their saliva and sell it to the public.”

The Brakes bought a Bronco that had been donated to the Northwest Chapter of the Paralyzed Veterans of America, a nonprofit group, in September 2003. At the time, the Bronco had about 132,000 miles on it.

The nonprofit had the Bronco towed to an auction house. A month later, it sold at Whitey’s Auction in Olympia for $850 to Chris Iodice of Seattle.

An associate of Iodice’s, Tony Demuth of Sultan, placed the Bronco for sale on eBay. Demuth, who worked at a Lynnwood dealership called Extreme Auto Sales, advertised it as having 36,055 miles.

Because Demuth is related to the owner of Extreme Auto Sales in Lynnwood, the state could take administrative action against the dealer’s license.

On the Bronco sale, the state cited Extreme for failure to maintain complete and accurate records, odometer discrepancy/disclosure and advertising violations.

In connection with other eBay sales, the state issued a correction notice to Extreme for aiding and abetting curbstoning, and violation notices to Iodice and another man.

Demuth, who blamed Iodice for the deal, agreed to pay more than $13,000 to the Brakes and five other buyers who purchased cars on eBay in 2003.

While denying he was chiefly responsible, Iodice described some tactics they used to lure buyers.

He said they arranged to acquire eBay user names with positive feedback, ran them into the ground, then switched online identities and started all over again.

They came up with a sympathetic story about a relative who passed away and was an avid collector who left “100 or so vehicles” to be sold. Iodice said they deliberately used low-resolution photographs to blur dents, bad paint jobs and other problems.

Officials have issued two subpoenas to eBay to learn the identities of Washington-based curbstoners. In response, eBay last year produced a list of more than 80 residents. All received a violation notice to make them aware they were breaking the law.

In response to the second subpoena, eBay recently produced 62 eBay names with 4,002 sales reported. The state is still comparing lists to check for repeat offenders.

Statewide, the licensing department has 16 investigators to keep track of vessels, motorcycles, registered tow-truck operators, scrap processors, and other activities besides curbstoning. Recently, however, one investigator was reassigned full time to monitor what’s taking place online. Officials acknowledge it will be difficult.

When fraud is involved, eBay can suspend the account and cooperates with law enforcement, said eBay spokesman Hani Durzy. He said it’s impossible to tell if the person behind a suspended account resumes business under a different name.

And good luck tracking down the curbstoner if something goes wrong and all the new buyer has is an e-mail address to go on.

By contrast, licensed dealers must disclose what they know about a car’s history and provide paperwork in good order. Not all do, but their license could be in jeopardy if they don’t.

Other eBay buyers were harmed by Demuth and his associates, according to the state, but were not compensated, because the state only took action in response to consumers’ complaints. Several who were harmed said their frustration only intensified when they sought redress from eBay, and felt they got the brushoff.

eBay spokesmen said the buyers may have waited too long to complain or surrendered the vehicles to the sellers and became ineligible for restitution.

Licensing officials note that eBay, while the biggest, is not the only online venue for car sales.

Sites such as www.autotrader.com and www.trucktraderonline.com also appear to do substantial volumes, they said.

Of the Bronco deal, Brian Brake said, “We thought people were a little more honest than they turned out to be. We probably were a little more trusting that we should have been.”

Peter Lewis: