Recently, I was speaking with several dealers discussing some odd activity from a prospect.  The discussion centered around a prospect who inquired about purchasing a retail unit paying by credit card.  The prospect lived out of State and the other dealers, along with myself, assured him there were definitely red flags high on up on the flag pole and to walk with caution.    

I didn’t think much about that conversation until a few weeks later.  I was traveling to an onsite and one of my retail 20 Group dealers called my cell.  He was not part of the conversation I described earlier.  This dealer started with, “I need some advice…” He then unfolded a story that had my stomach in knots very quickly.  His dealership is in the MidWest.  A prospect called on two vehicles on his


website.  The prospect was in New York.  After a few days and several phone calls, the prospect said he thought the price on the two units (which were not unique vehicles) was fair.  He asked the dealer if he could ship the two units to him in New York and offered to pay for shipping.  The dealer priced out shipping and the prospect asked if he could pay just using a credit card over the phone.  The dealer said he couldn’t do that because there was a merchant fee that would be expensive.  The prospect offered to pay for the shipping and the credit card merchant fee.  I know… you stomach is now turning in knots too.

The dealer took payment, and made a high gross profit on both units.  He told me he was a bit uneasy about the deal, so he decided not to ship the two cars until the money cleared and hit his bank account. 

After a few days, the $56,000.00+ was sitting, safe and secure in his bank account.  Still a bit nervous, the dealer shipped the vehicles to New York.

After a week or so, the dealer noticed over $20,000 had been taken out of his checking account.  In a bit of a rush, the dealer called the bank and was alerted that the credit card company had withdrawn the funds from one of the vehicles.  This is about the point in the story where the dealer called me.  Sadly, he is now idling waiting for the $35,000 to be withdrawn from his account, which could happen tomorrow or a month or two down the road.  The buyer used two separate credit cards with the same name to purchase the two vehicles.

The dealer’s insurance will provide some assistance in this situation, but there is potential the insurance claim(s) will not cover all of his losses.

I recently brought this story up in my most recent 20 Group and I was surprised how many dealers have been received phone offers on purchases using credit cards.  Here are a few tips to use if you are in a similar situation.

First, consider a credit card limit per purchase.  For example, some dealers will only accept up to $5,000.00 per vehicle on a credit card and the difference must be paid in another method of payment.

Next, be very skeptical when a prospect is interested in purchasing vehicles that are not unique, resides in a different State, is willing to pay a market price as well as shipping and credit card merchant  fees.  This logic will pose the question:  why would an individual pass three or four states with thousands of dealers carrying the same vehicles at the same prices and be willing to pay for shipping and credit card merchant fees on top?

Last, verification of credit cards can be made by calling the credit card company.  Credit card companies have sophisticated fraud departments.  By calling customer service on the back of the credit card and creating an inquiry on the purchase, you remove much of the risk of accepted a fraudulent payment.

Speak with an attorney that specializes in vehicle sales and implement safe-guards that are Federally, State and locally complaint to reduce your exposure. 

Have you had an similar inquire or similar experience.  I’d love to hear your story.  Share you credit card purchase stories at