When AAA member David Schneider advertised his 2001 BMW for sale on an Internet car site, he got a lot of nibbles that seemed more than a little fishy. Six of the first 10 people who replied to his ad offered to pay with cashier's checks for considerably more than the asking price of the car. He wanted $22,000; they offered checks ranging from $28,000 to $33,000--provided he refund the difference.

"A couple of things made me suspicious," says Schneider. "First, they all advertised themselves as brokers representing a third party. I thought, why do you need a broker to buy a used car? One claimed that he was representing a buyer in Europe. Why would he need to come to the U.S. to buy a European car? I figured they were scamming someone--either me or the government."

As it turns out, Schneider's suspicions proved well-founded and, luckily, he didn't fall victim. His story, however, illustrates one of the perils of buying and selling cars on the Internet. As a worldwide communications and marketing tool, the Internet has revolutionized auto sales. Its reach extends far beyond a local newspaper's classified ads, matching potential buyers with available vehicles in another county, another state and even another country.

But a bigger pool of buyers and sellers also means deeper water where an unsuspecting shopper can get in over his head.

"People sometimes assume accuracy on a computer simply because it's an electronic machine," says Charlie Vogelheim, executive editor of the Kelley Blue Book, a used-car pricing guide (www.kbb.com). "But it's just a communications device. It's not insurance against fraud or deception. When you buy a car over the Internet--especially a used car--you have to exercise the same caution as you would when using any other means." Experts offer these tips for safer shopping and selling:

Tips for Buyers
Use your eyes--or someone else's. Would you consider buying a car through the classifieds without seeing it or test-driving it first? Then why should buying one through the Internet be any different? Surfing the Web for the best deal probably saves you a few hundred dollars. So invest part of your savings in an afternoon drive--or even a cheap plane ticket--to check out your prospective wheels with a local mechanic.

"An automobile is the most complex consumer item you'll every purchase," says Vogelheim. "There are so many things to consider in a car. Even if it's exactly as described--in good condition, with detailed maintenance records and no record of accidents--there are still some things you have to find out for yourself. For example, did the owner smoke in it? The car could fit the description perfectly but smell like an ashtray."

If you can't see the car for yourself, you can rent a pair of eyes. Inspection services such as Carchex ( www.carchex.com) will look at it for a fee. At Carchex, for instance, $80 will get you a 55-point inspection by a National Institute of Automotive Service Excellence (ASE)-certified technician. "Although we don't put the car on a lift and inspect it the way a mechanic would, we do test-drive it," says Jason Goldsmith of Carchex. "We can tell whether the transmission slips, whether the brakes squeal or feel worn and whether the engine runs well. We make sure the description of the vehicle closely resembles the reality." The service also offers one- to three-month warranties for an additional fee.

Even if you inspect the car yourself or hire a third party, "make the sale contingent on the car passing state inspection," advises Kelley's Vogelheim. That's particularly important for New Yorkers buying a car from a state where inspections aren't required.

Tips for Buyers
Do your history homework. Ask for the vehicle identification number (VIN) and check the car's history through Carfax or other reporting service. A vehicle history report can turn up cases of suspected odometer fraud, a "branded" title (issued when a car has been totaled in a severe collision or flood) and other red flags.

Check out the seller and the site thoroughly. Internet auction sites usually offer ways to check a seller's record. For instance, eBay uses a system of color-coded stars to rate sellers based on customer feedback. The site also offers a limited protection plan that covers major mechanical problems, with certain restrictions. Read all the fine print before you make a purchase.

Guard against insiders. "If the seller insists on using a particular inspector, or if he refuses to allow the car to be inspected, that should send up a red flag," says Debbie Matties, staff attorney with the Federal Trade Commission's Division of Marketing Practices. "You should have the choice." Matties also recommends checking with local independent consumer organizations such as the Better Business Bureau, particularly when doing business with a dealer out of your immediate area.

Tips for Sellers
Beware of phony checks. As David Schneider learned with a little research, a cashier's check is not as good as cash. The Internet Fraud Complaint Center (a joint effort by the FBI and National White Collar Crime Center) warns that Internet predators have been running phony cashier's check scams for more than a year. Essentially, an interested party--usually from a foreign country--expresses interest in an advertised vehicle. On some pretext (such as paying for shipping costs), the buyer offers to send a cashier's check for more than the purchase price, asking the seller to cash the check and remit the difference by wire transfer. Only later does the seller learn that the check is counterfeit, the bank holds him responsible for the funds, and he's out the several thousand dollars that he had wired.

Ensure the legitimacy of escrow services. To protect buyers and sellers from fraud, online escrow services hold payment until the buyer receives and approves the vehicle. According to the FTC, you should suspect any online escrow service that doesn't process its own accounts or requires you to set up accounts via online payment services. Check with the Better Business Bureau, state attorney general or consumer protection agency--both in New York and in the state where the service is based--for legitimacy and unresolved complaints against the service.