By on August 1, 2009

Like tens of millions of American consumers, I shop for my cars online. I do due diligence; working hard to filter-out fraud and minimize the unavoidable unpredictability inherent to such transactions. My methodology is far from perfect—as my recent experience will attest. In fact, my tale of woe provides a real life example of how the biggest online seller—eBay—responds to fraudulent transactions.

I was looking for a sedan with relatively low mileage. Something a bit interesting, but not insane. Somewhere between, say, a Honda Accord and an Alfa 164. I trolled eBay’s No Reserve auctions looking for a deal. And there she was: a 2002 Mazda Millenia L 65k miles, good condition.

Before bidding, I ran a Carfax (clean) and checked the seller’s reputation (500 transactions, 98% good). It appeared that the seller wasn’t a dealer; the vehicle was listed as “my” (i.e. his) car. I checked the Mazda’s book value in comparison to the auction price. I researched the model and noted the Millenia’s predilection for failing automatic tranny’s and clogged egr valves. I asked the seller about these potential pitfalls. His response (recorded in eBay): the tranny had never needed servicing, shifted smoothly, and there were no dashboard lights on.

I placed a $4,050 bid and “won.” I paid my $500 Paypal deposit. Three days later, my brother and I embarked on a 500-mile round-trip road trip to pick up my new ride.

The test drive went well. Clean, nice interior. No funny sounds, bad shifts, etc. Being somewhat mechanically adept—but unable to put it up on a rack—I gave the Millenia L a careful inspection. I handed over the cash and hit the road. The journey home proceeded without event. And then . . .

The check engine light came on. I ran the codes at Advance: egr. The seller had the codes erased prior to selling the car. Then, a small transmission fluid leak. A slightly rough 1-2 shift. The leak grew larger every day. As I went into the glovebox for the manual to check on the recommended fluid level, I found a balled-up receipt for 24 ounces of “Lucas Transmission Fix.”  The receipt was dated the same day I’d picked-up the car.

I’ve been had.

I drove the car into the shop. The mechanic identified a front seal leak, which required dropping the transmission—and my pants, to the tune of $850.

I contacted eBay. The website’s calm, helpful rep said working with the seller was my first, best option for recompense. Customers who’ve proved that they’ve done this, and still can’t resolve the issue, can then file a claim with the eBay’s “Auction Insurance Agency.”

When I contacted the eBay seller, he told that he didn’t actually sell me the car; he let his “boy” post it on his eBay account. When I called the “real” seller, he offered to swap-in a replacement transmission from a wrecked Millenia. Uh, no. I secured five different quotes for the work. I choose the shop with the best quote.

Once Cottman Transmisson dropped the tranny, they discovered that the Millenia needed a full rebuild plus torque converter. After multiple calls and emails between myself and the actual seller, it was clear he was unwilling to pay to have a reputable shop fix the car properly. So I sent an email to eBay’s Auction Insurance Agency (AIA).

I received a phone call the next day. I described my situation, including the receipt for the Transmission Fix. AIA’s requirement: get two quotes on fixing the exact problem from two ASE certified shops. But no one will quote transmission work unless they can personally get inside the tranny. Even so, I eventually convinced a shop to write-up an estimate on the same amount of work. I faxed my quotes along with the receipt for the transmission liquid, proof of transaction, and my story in writing.

AIA tried to get payment from the seller. That didn’t go well. In fact, the agent told me that they “may” shut down the eBay seller’s account. Which would still leave the “real” seller unpunished, but it’s the right thing to do. At least it’s not my problem anymore.

eBay’s insurance policy only covers major components: transmissions and engines and . . . basically, that’s it. I had to spring for the Millenia’s torque converter ($360), which somehow isn’t considered part of a transmission. But eBay paid for the transmission rebuild: $1600.

I consider myself lucky. But this was an expensive lesson. Aside from the out-of-pocket expenses, I spent a ridiculous amount of time trying to recover from my initial mistake. My big concern: how well would my claim have turned-out if the fraud not been so easy to prove? What if I hadn’t bought from eBay? I’ll always be a bit more weary of their No Reserve auctions, but I guess my experience proves the sometimes you get what you pay for—even when you don’t.

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31 Comments on “eBay’s “Auction Insurance Agency” to the Rescue...”

  • avatar

    I would rather have my cajones ripped apart by a rapid pitbull rather than deal with eBay’s HORRIBLE customer service. You are a far, FAR better (and more patient) man than I am, N.N.

  • avatar

    commando1> I agree completely.

    The above story is why I won’t buy used unless it’s local and I can have a mechanic I trust look at it. I’d NEVER EVER buy a car from ebay unless it was local.

  • avatar

    You knew about the 2 problems it could potentially have. Your bid for the vehicle should have reflected a worst case scenario of needing a new transmission. If it went above that amount it’s someone else problem and you still have your money in your pocket.

    The first assumption should be the car has a bad tranny and if it doesn’t, then you win big. If it does you break even and have a new transmission to show for it. Lucas trans fix or other sly tricks are objectionable but you should expect that in the first place since you did a lot of research, right?

    I looked at a truck years ago that had an automatic transmission. The F-150 was famous for tranny problems up until 1997 that tossed a code 628 in the computer. I arrived, checked there were no codes, then did a test drive. And checked the codes again. 628. Seller had erased the codes. I offered a low ball price and was refused. Code scanners are cheap and worth every penny.

    When I resumed my search for a truck I offered less for the automatic versions because I assumed they either had a would have a problem with the box. I ended up with a manual trans version, not the auto I wanted, but I didn’t get taken. Every auto I did look at had code 628 so I realized it was endemic to the brand.

    Ebay may not have been a smooth partner but you did get a benefit from them. That 1600 was far more than they got in fees from the deal, maybe even more than they got from 100 deals. They were not the guilty party either.

    I don’t care for ebay’s policies toward sellers these days and as a buyer you still have to be aware of risks in buying anything. I’m sorry, but used cars are a risk, one you seemed aware in taking. I hope you enjoy the car anyway.

  • avatar
    Daniel J. Stern

    In the days before eBay, I bought several cars at (very) long distance on strength of nothing more than photographs and arranged 3rd-party inspections. The one time I got burned was when I forewent the inspection. Then along came eBay, which made it a great deal easier to buy a car on nothing more than seller’s assurances and pretty pictures. By and by, I made a new rule for myself: No more eBay cars. Since then, I’ve noticed a much lower incidence rate of being had. Correlation does not necessarily imply causation, but it does in this case elbow me in the ribs, waggle its eyebrows, and go “Psst! Pssst! Look over there!“.

    Perhaps if a car turned up on eBay and it were to look like something I just absolutely had to have, and it were local enough that I could thoroughly inspect and test drive it before considering placing a bid, I might consider doing so. But probably not.

  • avatar

    If the photo above is of the car in question, it looks like some of the body panels on the left side have been painted as well. . . .

  • avatar

    Nick – thanks for sharing the story. I feel your pain. It’s great that ebays-auction-insurance-agency came to the rescue for you – definitely an expensive lesson. Had you considered the pre-paid warranty/insurance products on the market today. I’m considering using them in a service and I wonder what people who use them have to say about their experience.


  • avatar

    torque converter is not part of the tranny? what is it then, part of the cup holder?
    all a tranny does is “converting torque and rpm”

    It’s nice they paid the majority.

    It’s the thing, you buy it at much less cost than otherwise, that usually comes with some risk. You knew that care is prone to tranny problems. so not much surprise there. there is always a good reason why a guy sells a used car. If it was perfect, he’d keep it right? and the fact that he sold it for less than market value should have been a tell tale.

    this doesn’t justify lying, and excuses with someone else’s ebay account. who did you actually have the contract of sale with? the car owner, or the ebay account holder? I mean when all of a sudden a different person shows up, that is fishy.

  • avatar

    I agree with “GS650G”

    It’s a USED car!!! Caveat Emptor

    Not to mention you paid somewhere around half the Kelley Blue Book value for the car.

  • avatar

    I don’t really understand the people who basically say “serves you right for buying a used car”.

    I think the point was that the seller said the tranny is ok, when he obviously knew it wasn’t. Which at least around here is not illegal if it’s a private person selling, but not exactly nice either, and i would say it’s a good thing to get some compensation for that.

  • avatar

    I don’t really understand the people who basically say “serves you right for buying a used car”.

    I think the point was that the seller said the tranny is ok, when he obviously knew it wasn’t. Which at least around here is not illegal if it’s a private person selling, but not exactly nice either, and i would say it’s a good thing to get some compensation for that.

    Exactly. My point is honesty. My wife once sold a 150,000 mile Ford that was running fine. A month later, she got an angry call from the buyer that the tranny died. Well, it was fine when she sold it, and we didn’t add any Lucas or do anything, we were totally honest. If the seller knew there was a tranny problem and said so, then there’s no problem. And if an issue developed later (remember the term “as is”?) then it’s the buyer’s problem. It’s not an issue of a used car, it’s all about honesty.

    And while private sellers aren’t held to the same legal standard as a dealer, hiding an issue is fraud in my book and should be actionable.


  • avatar

    i’ve been on both sides of similar (not via ebay) and came to the not unreasonable conclusion that a car can behave absolutely fine for one owner and get sold in good faith as problem free, only to embark on a series of hassles for the next owner who drives it differently. in fact, at this point one of my “services” for my mother during my occasional visits seems to be driving her elderly car while I’m visiting and having something break disastrously under my heavy touch.

    On the other hand, of course, “Some circumstantial evidence is very strong, as when you find a trout in the milk.” – Henry David Thoreau. Or a wadded up receipt for trans goop in the glovebox. maybe they subconsciously wanted to get caught.

  • avatar

    FYI to anyone contemplating using eBay: a 98% rating is actually not very good. It means 2 out of 100 buyers were dissatisfied enough to file their displeasure. Since up to recently, unhappy buyers risked retaliatory negative feedback, the negative feedback rate is typically highly underrepresented.

    I’ve sold about 200 items on eBay and bought about half that many, and my rating is 100%. 100% ratings aren’t uncommon. Very large-scale sellers will rarely be at 100% but are usually, if good, in the 99.6%-plus range.

    Don’t think of a seller rating like a grade in your first-year undergrad English class.

  • avatar

    Bottom line is, it’s never wise to purchase any used car without having it checked out by a reputable repair shop. If you don’t go this route, you are always taking your chances.

  • avatar
    Chicago Dude

    In my fair state, someone who has sold 500 cars is a dealer that needs a business license. My fair state also has a huge budget problem, so they would probably be pretty interested in someone that isn’t paying their license fees and business taxes.

  • avatar
    montgomery burns

    “His response (recorded in eBay): the tranny had never needed servicing, shifted smoothly, and there were no dashboard lights on.”
    “The seller had the codes erased prior to selling the car”

    If this is true then the seller misrepresented the condition of the car even though it is an “as is” sale. In my neck of the woods the seller would be liable for the repair or pay the buyer back in exchange for the car, undoing the deal.

    Many states have a period of time after the sale for the buyer to make sure the car is good and able to pass emissions and/or safety tests. if it fails the deal is undone.

  • avatar

    Here’s how my mind works:

    1.) 2002 Mazda Millenia L 65k miles for $4,050.

    This is an everyday sedan that should be an easy sell LOCALLY for MORE money. A free ad in Craigslist or the local paper and the car is gone in a few days. Therefore, why would this person spend more $$$ + time to advertise on EBAY? And why are they willing to sell for $500 under Manheim Dealer Auction price? One logical/probable reason – it’s a POS and he doesn’t want to (or can’t) dump it locally…

    That being said, my ‘mind’ now works this way after several ‘live and learn’ lessons. My first time on an airline was to look at a $9,000 Ford GT kit-car that ‘looked’ mint in that black and white Autotrader ad (this was before those ‘internets’). The owner said it drove great! LOL. It was a disaster… The steering didn’t work + shifter + brakes, not to mention the rest of the car was garbage. Well, at least I got to fly on a plane….

    After 1,000’s of miles travelled, here’s what I’ve learned. Never travel long distances for a car that should have no problem being sold locally… Even a Ford GT Kit-Car in ‘decent’ shape would have no problem selling for $9,000, let alone an everyday sedan.

  • avatar

    If you’re going to travel for any used car purchase, it shouldn’t be difficult to arrange a check with a local mechanic at your destination city ahead of time.

    Ebay is fine – but you have to be willing to walk and eat your travel expenses. Many people have a hard time doing that.

    While hardly perfect, I think it’s best to travel only for CPO vehicles from a dealer.

  • avatar

    I’ve bought a handful of motorcycles and cars on eBay, and I’ve sold just as many. most of the transactions went smoothly.

    The worst was when I was completely screwed by a kid selling a 72 Beetle that failed to disclose the rotted frame. Push on the floor board, and watch the seat move. Ugh.

    The second worst was when a guy showed up to purchase my Miata, and proceeded with a 30 minute driveway inspection. I wanted to kick him in the nuts. That was my baby. I shouldn’t have sold her. She was perfect and he got a great deal.

    I had another gentleman, a Russian man, who wanted to purchase my Escape for export to Russia. Because of all the fraud, I was a bit rough on him. Turned out I was the jerk. To my demands, he showed up at the train station with cash in hand. He gave the car a three minute inspection to verify my description, thanked me (he probably should have punched me, given the attitude I gave him while we tried to work out the deal), and went on his way. My beloved Escape is now trolling Siberia or Moscow or St. Petersburg, or some other place in Russia whose name I am not aware.

    Just recently, I purchased a replacement engine for my Ninja. My original engine developed a knock on The Tail of The Dragon. The eBay seller said his engine had 700 miles on it and looked to be in great condition. When it arrived, it was seized. Despite writing in his ad that no warranty was expressed or implied, he was a gentleman about the whole deal. We came to an agreement that protected both our interests, and I am satisfied with the outcome.

    My thoughts on eBay are this: There will always be crooks, so exercise caution. But most folks truly are honest. At least that’s been my experience.

  • avatar
    Greg Locock

    “torque converter is not part of the tranny?”


  • avatar

    Unfortunately, even a 100% feedback rating is no guarantee. I was recently burned on a W123 Mercedes wagon from such a seller. Just like with this Mazda, I asked about known trouble areas such as the hydraulic rear suspension and I was assured they were OK and the car had just been checked out by an independent Benz specialty shop. I also asked about the climate control and the cruise control and was told they were fine. Well, when the car arrived guess what. The cruise control was DOA. Both rear suspension accumulators were toast (Good God, the thing rode like a buckboard). The A/C did work — for about a week and a half before the refrigerant went AWOL. There was indeed a work order from a shop dated a few days before he listed the car. They charged the A/C but evidently didn’t fix the leak. And he didn’t disclose the broken odometer. The service records he gave me showed that 7 or 8 years ago, the odo was reading only 2000 miles less than the current reading, so who knows how far it had gone.

    This seller’s feedback had several comments to the effect the cars were BETTER than expected — which I took as a good sign, because you see a lot of half hearted positive feedback on cars, like “good value for the money” or “car is ok.” The seller was initially apologetic but stopped communicating when I started talking about getting some $$$ back. I resold the car on eBay honestly described and lost $1100 on the deal.

    On the other hand I have had several very good experiences with eBay cars. I have found that I do better sticking with cars that I know very well. I have become a very good judge of 70’s Cadillacs for example. In contrast, that wagon was my first attempt at buying a Benz.

  • avatar

    I recently had a bad eBay experience and was ready to contact every single agency with a three-letter-acronym name between my state & the seller’s.

    @PhotoJim: YES!!! My transaction was with a guy with a ~98.1% rating.

    Following my 1st email, he basically said, ~’Tough crap. I don’t care if it’s DOA. The auction said no returns.’


  • avatar

    I’ve bought several used cars, and the only time I was lied to was when I bought a CPO vehicle out of state from a dealer. All other transactions were purchases from individuals.

    Not saying that all dealers lie and all individuals are truthful, but when you meet an owner, you get a much more clear picture of how that car was maintained and treated. A dealer is a dealer.

  • avatar

    Generally I would say it’s a bad idea to buy from someone who isn’t a dealer, especially on eBay. It’s important to look carefully at feedback too, not just the score, but what they have actually sold. A guy who’s got a 100% score over 5000 transactions but has gotten by buying and selling comic books over the years probably isn’t the one you want to buy a car from.

    I’ve bought 2 cars on eBay, both from the same dealer in Texas. He’s got a whole rack of selling awards and a 100% rating over about 2500 transactions, all involving car sales. Good experiences both times, except the last vehicle had a slight scuff that I’m pretty sure was the shipper’s fault and not the dealer’s.

  • avatar

    thanks for the responses (I am the author of the article). Some additional points–I wasn’t aware that the seller was not the eBay account holder until after the fact–when I contacted the seller via eBay to discuss the problem. Until then, there was nothing to lead me to believe they weren’t one and the same. Also, this guy had only sold a few cars, 500 transactions were mostly DVD’s that he sells.

    In the end, the car, despite it’s faults, was still a great deal, pricewise. I have traveled for and bought 3 cars on eBay now, this is the only problem I’ve had, but they’ve all been great deals. I think this scenario is a testament to eBay standing behind the transaction. They ponied up $1600 for a $4k car…that’s not bad in my mind.

  • avatar

    Still and all, after seeing friend after friend getting totally hosed, screwed, blued and tatooed by eBay Motors, I would not even buy a car on eBay.

    No way, no how. Ever.

    I only buy anything on eBay that I can afford to totally lose, money wise.

    I did have an “interesting” situation with a car dealer 150 miles away when buying my “toy” (1993 “future collectible” BMW 740iL). It was on, and it was a dealer. It was within my own state. (I chose to NOT buy from individuals and TO buy within my own state to try to reduce the chances of being hosed). I only had $3000 to waste/play with. Interestingly, 3 cars of interest (a Lexus, a Volvo and a BMW) were at the same dealership, plus there were 3 or so other cars in the same general area to check.

    I drove down with my Mrs and looked at all of the cars, drove the BMW, after already having done AND carfax on them, all came back fine on the BMW and the other cars, too. I inspected the car, it was said to be a Florida car (which actually checked out according to the paperwork in the glovebox from the original owner).

    Paid cash (no hassles about driving 150 miles home, waiting for a check to clear, driving back 150 miles and picking it up to drive 150 miles home a week later). Got the standard Michigan dealer form showing I’d paid for the car ($2500, knocked down from $2800), tax, title and tags – the last two of which would come later. Got a 15 day “temporary” paper for the back window to drive home once I got home, put the car on collector car insurance.

    Went away on a short vacation, came back and – no title, no license plates from the state. Called the dealer. Runaround. Uh oh. Called back the next day. They wouldn’t pick up the phone (caller ID obviously comes into play, here). Called on Monday from my work number – more runaround.

    I’m not p*ssing around with this bullsh*t, so I called the Michigan State Secretary of State’s office in Lansing. They acted like I did something wrong… asshats. So I stayed calm, explained to the 2nd then 3rd person – finally got some lame assurances that “they’d look into it”. Yeah right. I was thinking – wow, I’d done EVERYTHING I could think of to keep from getting ripped of – and I have a nice lawn ornament weighing 4200 pounds that I can’t drive, can’t collect insurance on if an asteroid hits it (no title, no settlement from insurance…) and I can’t get any joy from the dealer NOR the state.

    I kept bugging the Lansing office. I didn’t even call the dealer any more after the Monday I turned them in to the state.

    Bottom line was – the state eventually sent a field officer out to look at the books. The dealer had TEN cars that the title, tax and transfer paperwork had never appeared in Lansing on. Amazingly, the owner of the dealership (whom I’d never met) telephoned my home and said “I’ll take care of it” (and he did, too).

    I suspect very strongly that the state threatened to take away his dealers license. That got his attention.

    I now have my “toy”, clear title in the safe at home and tags on the car. I did, however, not have use of my car for 3 weeks.

  • avatar

    A few things about online cars and Carfax. First of all, accident history (and even a total loss) don’t always show up in the car’s official history.

    Second, did you notice the glut of Florida and Texas cars on Ebay? My understanding is that it’s easier to wash title from these two states and convert them to clean title (correct me if I’m wrong).

  • avatar

    I bought a bike off eBay earlier this year. Only searched locally so I wouldn’t have to travel far. The seller was great up front, there was some damage on the bike that was fully disclosed in the photos. The transaction went smoothly until it came time to get the tag. The paperwork took forever, and repeated calls to the dealer went unanswered. My temp tag expired before I finally reached the owner of the dealership that sold the bike, and I was only without use of it for a week or so. I DID have to pay a late registration fee with the state ($10, which I did not want to fight over). I was pretty ticked off about the end of the process, but realize it could have been much worse.

  • avatar

    Doesn’t everyone know by now not to buy used Mazdas with V-6 engines and automatic transmissions? They ALL fail.

  • avatar

    I’ve bought several used cars, and the only time I was lied to was when I bought a CPO vehicle out of state from a dealer…
    A dealer is a dealer.

    I assumed incorrectly that all CPO were equal. That’s probably a false assumption. I’ve never dealt with a Detroit CPO vehicle.

  • avatar

    I’ve purchased two motorcycles and three cars on eBay and sold the same number. The ONLY problem I ever had was when I bought a car from a local dealer that I found on the website. It wasn’t a fly-by-night used car lot on the side of the road with a bunch of streamers on the antennae either, it was a franchised Mercedes-Benz dealer.

    Whenever I’ve bought vehicles before I either had a friend local to the car go look at it for me or arranged for a professional inspection. With the Mercedes I was lulled into a false sense of security because they were a big dealer. It was also a lot more difficult to try to arrange an independent inspection since, unlike an individual seller, they wouldn’t release the car to me to take to a mechanic and they wouldn’t take it there for me.

    It’s not like I got totally taken, but the car did have a few minor issues and I later discovered some sloppy repaint work on this “one-owner” creampuff they described (and the CARfax confirmed). I didn’t spot any of those issues myself as they didn’t show up for a few weeks after the car had been exposed to some hot sun (leading me to think that the paintwork was done very recently and the dealer knew about it).

    Unlike a private owner, the dealer salespeople usually know little of the previous history of the car. It’s also unlikely that you’ll get that all-important stack of receipts that the previous owner stuck in the glovebox.

    Given that dealers also usually charge a premium for their used cars I see no reason to buy from one ever again unless you simply need access to their financing. It’s not as if a used car (unless it’s a CPO) comes with a warranty or that they will remember your name if the transmission implodes two blocks away from their lot.

    Similarly, when I’ve sold my cars and bikes online I made it clear in the listing that I welcomed pre-purchase inspections and would allow a week to arrange for one post-auction as long as a refundable deposit was received. If I see a listing that is covered with a bunch of buyer-beware, “as is,” no inspections allowed language I just click away.

  • avatar

    highrpm :
    August 3rd, 2009 at 8:03 am

    A few things about online cars and Carfax. First of all, accident history (and even a total loss) don’t always show up in the car’s official history.

    Second, did you notice the glut of Florida and Texas cars on Ebay? My understanding is that it’s easier to wash title from these two states and convert them to clean title (correct me if I’m wrong).

    True, true… also, remember that Florida and Texas (anywhere on the Gulf of Mexico actually…) are also prime areas for hurricane damage. Flood cars are apparently still around!

    I have bought two cars online… one on e-bay, one on AutoTrader from an out of state dealer. I learned from my e-bay transaction: INDEPENDENT INSPECTION!

    My current Porsche was bought on AutoTrader… it was better than they described. In addition, they had permission from the former owner (a long term client of the dealer) who spent 45 minutes on the phone with me BEFORE it was inspected. One year later, still perfect. :-)

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