Car Sale or Return

Lost asset fraud

Stormcatcher is widely regarded as the leading law firm for motor trade and automotive related fraud, lost asset fraud and missing trader fraud involving sale or return (SoR). We are uniquely experienced in the methods employed by unscrupulous car dealers, traders and scammers; we simply know the rules, the scams and the tricks of the trade inside out.

Dealers offering vehicle owners car sale or return agreements or SoR services - sometimes referred to as a consignment sale - have become commonplace, and nowhere more so than in the luxury, performance and supercar market.

What is SoR?

The principle is simple and, in many respects, follows the business model of estate agents, Airbnb and yacht brokerages where the car dealership offers to market cars on behalf of the owners, for a commission.

The SoR agreement is usually formed by written agreement between the dealer and owner, a bit like an estate agent, where the advertised price and the commission rate is agreed as well as who is liable for any repairs, warranty costs etc.

Not an agent

Often, if not invariably, the car dealership is not acting as an agent for the seller and therefore cannot agree a sale without the express authority of the owner.

However, the motor trade differs from other industries in that the selling dealer takes possession of the vehicle, to display in its showroom.

This not only creates the outward impression the dealer owns the car(s), but it may appear more solvent and perhaps more affluent than it is. Importantly it gives the impression the dealer has the authority to sell the vehicle. This will be amplified by the trader being in possession of the V5C logbook.

The Scam

There are two potential areas of risk for both SoR car owners and car buyers.

For the car owner, there is naturally a risk of the trader selling the vehicle and subsequently not paying the owner. This is of course increased if the dealer is in possession of the V5C logbook, the spare key and all the other documents.

Don’t give up the log-book and spare key until the sale proceeds are in the bank!

Car Finance

It will likely be a condition of a Hire Purchase agreement that the hirer must not give up possession of the vehicle and if you do, you will be in breach of contract and run the risk of the finance company terminating the agreement.

In any event, unscrupulous dealers will target and canvas sale or return of cars on finance. The reason is that traders think if they sell a car to a private buyer who does not know the car is on finance, the buyer claims title to the car. The dodgy dealer then does not pay the seller and keeps the sale proceeds.

Car Buyer

For car buyers, you can be left thinking they’re buying from a dealer with all the consumer rights and protections that go with that, when this is not the case. Aside from this you could be buying a car that the dealer doesn’t own, whether it’s on finance or not,  and you may end up with nothing for your money.

Sound familiar? Then: