WHEELING & DEALING
Going once, going twice, conned! Here’s how to avoid car auction scams and drive a hard bargain
Here’s the lowdown on the vehicle auction industry via the process of getting new wheels in this way. It can be risky if potential buyers are not well informed.
Fans of Marvel Comics superheroes have a multiverse in which there are various iterations of their favourite characters, and fans of non-fungible tokens are said to be building a digital world known as the metaverse.
But South Africans are forced to contend with something far less exciting: a scammerverse with a seemingly never-ending parade of con men who would win gold medals in all the categories at the Scammer Olympics, if such a thing existed.
The ways for us to get scammed evolve every day, and because we need to constantly be on our toes to stay safe, I decided to go through the process of buying a car at an auction to learn about the scams and hopefully provide the kind of information that would help mitigate the inherent risks of buying a vehicle in this way.
On the subject of scams
When I sat down to interview the team at the WesBank Auction Centre in Midrand, one of the first things they wanted to talk about was the auction scams.
“Facebook Marketplace is where a lot of the scams come from,” said WesBank asset remarketing sales manager Lee Jackson. “The scammers actually come to our auction centre and take pics of the cars with the WesBank banners in the background and they pretend to be WesBank employees on Facebook.”
We have had victims of these scams paying R50,000 to someone to hold a car for them and then they come to our office to collect their vehicle and we have to tell them they’ve been scammed.
The scammers then post these pictures on Facebook in an attempt to sell the cars at ridiculously low prices. When someone is interested in a vehicle, they send a deposit request to “hold the car”. This will be done on a WesBank letterhead to make the scam look believable. When people pay the deposit amount, the scammer tells them to go to the auction centre to pick up their car.
“We have had victims of these scams paying R50,000 to someone to hold a car for them and then they come to our office to collect their vehicle and we have to tell them they’ve been scammed,” said WesBank administration manager Radeshni Pillay.
Added Jackson: “People must remember that auction cars are sold during the auction. We never hold cars for anyone and we will never request that you pay a deposit for a car. You register for an auction and then you bid. There is no other way to buy a car at an auction.”
Aren’t auctions risky?
Yes and no. Vehicles at auctions are sold voetstoots, meaning there are no guarantees as they are sold as is.
When I asked WesBank asset remarketing head Templeton Bonga what would happen if a car sold at one of its auctions breaks down shortly thereafter and the buyer isn’t able to drive it, he said: “We assess cases individually.
“If that were to happen, we will do an investigation and if we find that there was something catastrophically wrong with the car, we will look into cancelling the purchase and refunding the buyer.”
One of the reasons I decided to consider buying a car at an auction is that the Motor Industry Ombudsman of South Africa (Miosa) is so inundated with complaints from people who have bought vehicles from both new- and used-car dealers that it took three weeks for them to acknowledge receiving an email from me.
Under no circumstances can a supplier waive a consumer’s rights to recourse in terms of Section 56 of the CPA.
The ombud receives hundreds and occasionally thousands of complaints every month from people who have bought cars from used-car dealers as well as big franchise dealerships, and it’s obvious that buying a car from a new- or used-car dealer isn’t as safe or effortless as it once was.
I visited a few used-car dealers to test-drive cars and assess their service. I discovered that a few of them had sales contracts in which it was stated that the dealership offered no warranty on the vehicles being purchased.
When I took issue with a dealer about this and pointed out that the Consumer Protection Act (CPA) stipulates that there is a six-month implied warranty, I was told that his dealership sold aftermarket warranties for those who are interested, but wasn’t liable itself in any way.
“The CPA makes provision for a six-month implied warranty of quality,” said Lucious Bodibe, public affairs manager at Miosa.
“Under no circumstances can a supplier waive a consumer’s rights to recourse in terms of Section 56 of the CPA.”
Consumer journalist Wendy Knowler has often reiterated the point that dealers cannot operate outside the law by having contracts that say there is no warranty on vehicles. But many of them do exactly that.
In addition, Knowler is constantly inundated by complaints from people who have bought cars from dealers who refuse to fix problems that are discovered shortly after their purchase.
“They [the dealer] can disclose certain pre-existing issues and the customer can agree to accept the vehicle with those disclosed defects, but there can be no blanket ‘no warranty’,” she said.
Knowler said she had received complaints from people who bought cars at auctions, too, mostly because the cars had “undisclosed defects”.
She added: “Voetstoots is massively risky for all but those who are in the trade, or who really know the game.”
Know your auction
When the Covid-19 pandemic started, WesBank designed an online auction system to facilitate bidding on its website.
Private buyers and dealers go through a registration process and once WesBank verifies your identity and goes through the FICA process, you are given bank details to pay a refundable deposit of R5,000 to participate in an auction (WesBank’s auction guide can be downloaded here).
Auction vehicles change every week and they can be viewed before an auction starts. Buyers can start the car, but they are not allowed to drive it. If WesBank notices any defects, it puts notes on the top left-hand corner of the windscreen.
Some of the notes I noticed included “spraywork done”, “engine light on”, “engine knock”, “excessive smoke” and “hail damage”.
“Our stock is repossessed cars,” said Bonga. “We do runner and non-runner auctions so that vehicles that aren’t in running order can be sold for parts.
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“Vehicles are sold as is… and people must do their homework. I encourage people to consider buying a vehicle at an auction because many dealers source their cars at auctions. And if you buy at an auction, you’re not paying their mark-up,” he added.
Aucor managing director Jacques van der Linde, who is also the director of the board of the South African Institute of Auctioneers (SAIA), said: “From an ethical perspective, auctioneers are to never mislead prospective bidders as to the condition of an auction vehicle. The South African Institute of Auctioneers does have a code of conduct which needs to be complied with by all SAIA-registered auctioneers. This code of conduct is available on our official website.
“In an instance where a member of the public feels aggrieved by any action of a SAIA-registered auctioneer, they may lay an official complaint with SAIA by utilising one of the following channels.
“Visit our website and follow the procedures as set out under ‘About SAIA’ and then the drop-down menu leading to ‘Log a complaint’. Then email Sonja Styger on [email protected].”
Weigh the pros and cons
There’s no doubt that buying a car at an auction is risky, but the number of Miosa complaints indicate that buying a car from a dealer is also risky.
Additionally, there have been many instances in which dealers simply ignore Miosa’s findings and refuse to pay the fine imposed or abide by the ruling.
Bear in mind that the high number of consumer complaints being sent to Miosa and Knowler are for problems that occur within six months of a vehicle being bought. There is little to no recourse for consumers who experience problems from the seventh month onwards.
While assessing vehicles on auction, I noticed that some cars available at WesBank auctions had a full service history and some were still covered by the manufacturer’s maintenance plan.
These are the cars I focused on, and in my opinion buying a car at a WesBank auction is a risk worth taking, if you do the requisite research. DM
How to buy an auction car
Assess the various auction companies. I emailed MFC Auction House and it never replied so I struck it off my list. I also emailed Bidvest Burchmore’s and when I sent through a list of questions, they seemed confused by them. When I explained that my story would cover various aspects of the auction industry, they didn’t reply or answer any of the questions, so I struck them off my list too. When I emailed the WesBank Auction Centre, head of asset remarketing Templeton Bonga invited me to the head office in Midrand and assembled his team to answer my questions. He also answered additional questions via email. I therefore felt confident enough to bid on cars at WesBank auctions. (There are other auction companies one can assess.)
Understand the Ts & Cs. Each auction house has a different set of rules, so familiarise yourself with all the rules. Also, understand that auction houses are only required to declare the defects they are aware of and this means that you might buy a vehicle that has additional defects.
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Be aware of the costs. You will have to pay VAT on the vehicle you buy at an auction and each auction company has different costs that you, as the buyer, must cover.
You can apply for finance for certain vehicles. If you need finance, apply before the auction so that you know how much you can spend.
Be patient. I’ve been watching the weekly auctions at WesBank for more than a month and only recently found a car that I like, and one that’s within my budget. It has a service history and the balance of the manufacturer’s maintenance plan, so I feel confident enough to go ahead and bid on it.
Do the research and don’t rush into the purchase. Check the retail value of the vehicle you’re interested in to ensure you don’t pay more at an auction than you would at a dealership. Set a limit for yourself to ensure you don’t overspend at an auction. Don’t forget to physically check the vehicle before an auction and don’t allow others to bid on your behalf.
Do not buy cars on Facebook. Understand that if a deal looks too good to be true, it probably is. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.