Crimes of Persuasion

Schemes, scams, frauds.

Fraudulent Claims of Government Auctions of Seized Property

You pick up a flyer, which has as its centerpiece, a photograph of a shiny Ferrari along with two Jaguars.


For Current Local Listings Call: 1-800-883-0819 ext. A-9034




You call the toll-free number and learn that the listing information advertised on the flyer sells for $59.00.

They reiterate the claim made on the flyer —that government seized vehicles, in good condition, can be purchased by the public at prices substantially below their wholesale values, sometimes as little as $200. After asking for your address they tell you, regardless of your location, that "our computer's showing anywhere from one to four auctions, in and around your area per month."

"The government sells cars for whatever they can get, just to get rid of them, usually at a giveaway price."

You are also told that you will receive catalogs in the mail "about a week before each auction" that will describe when and where the next auction will be along with listings of actual vehicles that are available for purchase at auctions in your area.

You may be uncertain about ordering right away but they suggest you take a trial look at it - without obligation.

"We'll send it to you today. That will save you the trouble of calling back. Then you can make an informed decision based upon actual results. And with our guarantee, there's no risk".

If you agree to purchase the current local listings of seized cars you are asked to provide them with your credit card or checking account numbers. The $59.00 is then instantly charged to your account.

If you should change your mind and wish to cancel by calling right back you are told that the order has been "processed." You are instructed to wait until the materials arrive in the mail and then to follow the return instructions which are included with the guides.

Shortly thereafter, you receive two publications —the first entitled "Consumer's Guide to Government Auctions" and the second "Consumer's Listings of Government Auctions." Neither publication includes the current listings of actual vehicles that are available for purchase at auctions in your area. The publications instead provide only a list of public and private entities that regularly hold auctions.

You may even receive additional guides and find you have been billed for them as well. When the operator was discussing the other guides which they would gladly include, you thought they were free.

You quickly decide that this isn't worth the money you've paid and seek out the instructions for returning it. You notice in fine print the following:

If, after attending these auctions, you have not seen the results you expected, you may call Customer Assistance for a Return Authorization Number for an exchange or return* WITHOUT THIS NUMBER ON THE OUTSIDE OF YOUR PACKAGE, IT WILL AUTOMATICALLY BE RETURNED TO YOU.
*Please provide us with receipts from the auctions you attended since becoming our customer so that we can continue to improve the quality of the services we are providing.

When you call their Customer Service department to obtain an authorization number you are told that you cannot have one until you show not only that you were not successful using the "how to" guides, but also that you have met the conditions set forth in the fine print, i.e., provide them with receipts from auctions showing that you did not buy anything or copies of rejected applications of bids on houses. They essentially ask you to prove a negative.

Should you try to use the auction information package to actually attend auctions you find that the auctions are remote from your residence; that there are no bargain automobiles, houses, or other property at the auctions; and that proof of attendance at specific auctions is not generally obtainable.

In fact, people who purchase the publications on seized cars rarely, if ever, are able to purchase vehicles in good condition for a fraction of their wholesale values, including as little as $200. Indeed, while agencies such as the United States Marshals and the Customs Service do regularly seize vehicles, including vehicles in good condition, they rarely, if ever, sell those vehicles to the general public at prices substantially below their wholesale values.

In fact, cars sold at auctions typically sell for their fair market value or higher. At many government sales, the items are appraised prior to sale and will not be sold if the bid price is below what is reasonable. The only cars that sell for $100 to $350 are damaged or junk vehicles which are purchased for scrap.

Further, government agencies do not regularly seize and then sell expensive high-end vehicles at auction. In fact, it's unusual for agencies to obtain high-end vehicles - even through drug seizures. When agencies do seize high-end cars, they often use the cars in undercover work. They're not offered to the public until they're too expensive to maintain. At that point, they're no longer considered high-end vehicles.

One company —using the name "U.S. Agency of Consumer Affairs" —advertised the availability of special information on the auction of surplus government vehicles. When consumers responded to this company's advertisement, they were asked to provide bank account information under the guise that the information was necessary to verify credit for buying a car at auction.

Upon receiving this information, the company debited the consumer's account for $149.95 without authorization, then sent a packet of information which could easily be obtained for free at any public library.

Two other companies charged with running this scam will be required to pay over $4 million in compensation and be forced to sell, at auction, three vintage Jaguars that may be worth as much as $90,000 or as little as $600 if you still believe their fabrications.

For Current Local Listings Call: 1-800-873-0814 ext. H-9034

You call the toll-free telephone number provided and are informed that the listing information advertised on the flyers sells for $68.90.

The operators, who are always "standing by", restate that government foreclosed homes in good condition can be purchased by the public at prices substantially below their market values.

They say they will provide you with listings of actual homes available for purchase in the your area that had been "repossessed or foreclosed on by the banks or the government" and that there are several auctions held in your local area each month.

"You'll receive a current listing of repossessed, foreclosed and tax delinquent properties. These are offered at discounts by the U.S. Government and certain banks, up to half off. Sometimes less."

You are asked for your credit card or checking account information, which they say is required for purposes such as "verification" or to show creditworthiness or for security purposes. They assure you that the information will not be used to charge you and that you will be charged for the auction information package only at the end of a free 90-day trial period if you decide to keep it.

They say that you may return the guides for a full refund if you are not completely satisfied.

The moment you agree to receive the current local listings of foreclosed homes the $68.90 is quickly debited from your account.

They explain that they also have other programs and offer to send one or more of those additional programs along with the program you ordered. However, they fail to disclose that there is an additional charge for the other programs.

Although you may have authorized charges to cover the "eventual" cost of the program you ordered, you learn only later that they have charged you for the additional programs as well, or two or three times what you expected.

Soon you receive several publications, only two relating to your initial query —the first entitled "Home Buyer's Guide to Foreclosed Real Estate" and the second "Home Buyer's Listings of Foreclosed Real Estate." Neither publication contains the current listings of actual homes available for purchase in your area that had been promised.

In fact, people who purchase such publications on foreclosed homes rarely, if ever, are able to purchase foreclosed homes in reasonably good condition for substantially below their market values. Indeed, entities that regularly foreclose on well-kept homes that are in good condition rarely, if ever, sell those homes to the general public at prices substantially below their market values.

The information in the guides is available for free to real estate brokers and the general public through Multiple Listing Services, newspapers and online resources. Houses that sell for significantly lower prices are in poor, often uninhabitable condition or located in unstable or unsafe communities.

You learn only after receiving the apparently useless "how-to" guides that they will not even consider issuing a refund unless you have used the guides for at least 90 days. They ship to you along with their guides a copy of their "guarantee," which provides in part:

We are so confident in the quality and accuracy of the information you have received that, if after working with our Research Assistants for at least 90 days, you are not convinced of the value of our publications, our Consumer Research Assistants can authorize a refund (less shipping and handling) anytime within the next two full years. Products must be returned and in resalable condition with a return authorization number after the 90 day trial period for the guarantee to be valid.

If they eventually do provide a refund, they subtract an amount for "shipping and handling". If you try to get a refund before the 90 day period has elapsed you will also have to pay a 20% restocking fee on top of that.

Information about federal government sales programs is available for free or at low cost from the individual agencies. Some agencies and bankruptcy trustees maintain mailing lists with the names of people who want to be notified about upcoming sales. In these cases, they charge a subscription fee to maintain the list and cover mailing costs.

How-to Services Fraud