Published: May 23, 2013 8:52 PM EDT
Updated: May 23, 2013 8:56 PM EDT

LEE COUNTY, Fla. - You've probably seen those "For Sale by Owner" signs on cars all throughout southwest Florida. While there are plenty of legitimate "For Sale by Owner" cars out there for you to buy, in some instances, the seller may not be who you think. Some of so-called "owners" could be breaking the law and you could be paying for it.

What we're talking about is something called Curbstoning. It's when a person is in the business of buying and selling used cars without a dealer's license. They put a "For Sale by Owner" sign on it and often times place it on a busy street. It's been illegal since 2010, but the problem is, it's hard for you and for the state to pick out who's legit, and who's breaking the law.

Auto Haus in South Fort Myers has been open for about two years. "We inspect every car that comes in," Auto Haus Co-Owner Michael Tiani said. "If a car needs brakes, tires, hoses, belts, anything, it's done. It doesn't matter what it is, they're done and they're done right."

They take pride in the quality cars they sell. So when Tiani looks down U.S. 41 and sees people Curbstoning, "We don't like that too much."
He see cars for sale, parked on the edges of parking lots, taking advantage of the high-traffic locations. While some are legitimate, others are curbstoning.

"You have to have an approved location," Tiani said. "You have to pass a test to become a dealer. You have a pass a background check and you have to be bonded."

Curbstoning affects everyone from the consumer all the way up to the state. Buyers can get stuck with a lemon and have no trail back to the seller.

Marc Strengholt of Miloff Aubuchon Realty Group was a car dealer in Michigan for 22 years. He helped create the state's anti-curbstoning legislation. "They're not titling the car into their name," Strengholt said. That means they are not paying sales tax, they're not paying title fees, licensing fees and they are selling them to somebody else. Along with that, they are not paying income tax. They are not reporting it."

Let's look at the numbers. Selling 5 cars at a price of $3,000, without paying the 6% Florida state sales tax, means the seller is getting away with $900. If 100 people did this in one year, the Department of Revenue misses out on $90,000.
Then, there's licensing. Anyone who sells 3 or more cars in a 12-month period in Florida is considered a "dealer" and requires a dealer's license. Applying for a license includes $300 fee plus $54.25 for fingerprints and other fees. There's a $75 renewal fee each year after that. Over 3 years, 100 curbstoners cost the state nearly $128,775 in lost revenues from license fees alone.

"They're doing it as a business," said Diane Buck of the Florida Department of Highway Safety and Motor Vehicles. "I'd say on average, $5-6,000 per vehicle, so if a person didn't get ownership of that vehicle, that's a lot of money lost out of pocket with no consumer protection. That ultimately, could mean the person purchased the car and may not be able to establish ownership to the vehicle."

Cars aren't just displayed on the side of the road. Go on Craiglist, and you'll find listing after listing of cars for sale by owner. That's one new venue the state is using to track down offenders. "We can identity telephone numbers that are frequently published and track down who advertised the information that would lead us to perhaps the unlicensed entity who is curbstoning," Buck said.
Tracking them down is no easy task. We found sellers frequently change the display of their numbers, using dashes or spelling out numbers. Unlucky buyers can be left with dangerous cars, no protection and no help. That's what happened to Elizabeth of Lehigh Acres.

"I asked the guy, was there anything wrong with the car and he said no, motorwise, it was in great conditions," Elizabeth said. Three weeks ago, she bought a '96 Camry. The seller dropped it off and she said everything seemed fine. That is, until a few hours later.
I go to turn on the car and it don't want to turn on," Elizabeth said. "It kept losing power. When it finally turned on, it threw a lot of white smoke through the system."
That's not all. When she gave the trunk a closer inspection, "It was filled up to here with water," she said as she showed us the rust marks.

After taking it to a mechanic, Elizabeth, who's disabled and living on SSI, is looking at $1,500 in repairs. That's more than what she paid for the car. When she tries to call the seller, she gets no help. When we called, the seller, who goes by Carlos, changed stories and refused to cooperate. "I just looked at my mom and just cried because I was shocked," Elizabeth said. "I don't have money to come up with that."

While Elizabeth tries to figure out how she'll get to all of her doctors appointments, she warns other potential buyers to not be so trusting. "Check the car thoroughly and go with an experienced mechanic," she said.

Again, we're not talking about individuals like you or your neighbor selling your own used car. And, every car you see for sale by owner isn't defective. It's the people who make a living off of flipping cars without a dealer's license that are causing the problems.

While the state is pushing for education, they are also increasing enforcement. We just obtained new numbers showing that. In 2011, there were 904 unlicensed dealer investigations. In the 2012 fiscal year, which ends on June 30th, there have already been more than 1,500 investigations.
Before you buy, make sure you know what you're getting and trust the seller. And, before you sell, make sure you're following the law.

For more helpful information on the topic and on buying or selling cars safely and legally, check out these websites: