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The Rise of Ghost Dealerships in Canada: What You Should Know & How to Avoid Being Scammed

As the world becomes increasingly digitally connected, various industries experience both the benefits and pitfalls of the online landscape. The vehicle and powersports financing sector in Canada is no exception to this. In recent times, a concerning trend has emerged - the rise of ghost dealerships. These elusive entities operate primarily in the digital realm, posing significant risks to unsuspecting buyers. In this comprehensive guide, we'll delve into what ghost dealerships are, how they are created, the dangers and scams associated with them, and crucial warning signs to help you steer clear of potential scams.



A flow chart showing a possible ghost auto or powersports dealership network

Fun Fact - Even though they are through the same lending network, they might still run your credit multiple times.



What Exactly are Ghost Dealerships?


Ghost dealerships are essentially the online specters of the powersports and motorcycle financing world. Similar to the concept of ghost kitchens in the food industry, these entities exist only in name and generally lack a physical presence. Some might be affiliated with another brick-and-mortar dealership, while others can be started up by unlicensed individuals with various intentions. Ghost dealerships often utilize relationships with easy-to-access subprime lenders, while others form partnerships with established dealerships to access their lending network.


How are Ghost Dealerships Created?


Creating a ghost dealership is shockingly simple. All it takes is a basic website, a data collection form, and a social media presence. These entities collectively present themselves as legitimate businesses, making bold claims such as being the "largest used motorcycle seller in Canada" or boasting about their exceptional approval rates. Some may even adopt fake personas, pretending to be established businessmen or attractive individuals. Others may manipulate specific demographics, targeting individuals based on race, gender, or lifestyle. It is not uncommon to see a single website operating under multiple social media handles or business names to trick potential customers as illustrated in the flow chart above.


A comedic image of a salesperson sitting on a beach with their laptop creating a fake website with a cup of coffee

You never know where the "sales team" you're working with actually is located.


What are the Dangers of Working with Ghost Dealerships?


While not all ghost dealerships might be inherently evil, there does come some risk when it comes to working with an web-based entity, especially when dealing with personal information related to credit. Here are some of the issues one may encounter when they are working with an unverified ghost dealer:


Credit & Identity Fraud


As primarily online entities, ghost dealerships may engage in credit and identity fraud, putting your personal information at risk. At a minimum, some may simply act as conduits, selling your personal data to other dealerships. On the more dangerous side, they may sell your information through criminal networks to use it for illicit activities.


Zero Accountability


Ghost dealerships that lack a true physical location frequently close down only to resurface under a new alias. This absence of accountability implies they are not obliged to deliver satisfactory service, safeguard your information, or attend to future concerns. We've personally observed instances where these entities change their social media handles and information, essentially rebranding themselves as a new business. In truth, it's the same business as before, merely donning a new identity.


Demographic Targeting


Many ghost dealerships emerge as an alias to target specific demographics, focusing on factors such as race and gender. This targeted approach is generally discriminatory as, in most cases, these dealerships have no ties to the audience that they are hoping to take advantage of.


Lack of Security


In addition to identity fraud, ghost dealerships might overlook essential verifications conducted by reputable dealerships to ensure buyer protection. This could include failure to verify ownership or inspect for liens when acquiring units from KIJIJI, exposing buyers to potential scams and future complications.


Owners May Be Scammers


Due to the ease of creating ghost dealerships, criminals may exploit this vulnerability. Scenarios range from unpaid consignment agreements to unauthorized liens on motorcycles, emphasizing the importance of dealing solely with legitimate businesses.


A side by side comparison of what ghost dealership show as a nice clean dealership to a comedic dungeon style basement

Now you know why they want you to call before you visit their "showroom".


How Can You Tell if You're Working with a Ghost Dealership?


At this point you may have decided that you would like to steer clear from ghost dealerships. The only question now is - how can you spot a ghost dealership from a legitimate business? We'll go over a few concepts in this section that will help you distinguish one from the other.


Investigate Their Location:


A sure-fire starting point is to research the location that the dealer claims to operate from. If the dealership is operating out of a shared office, only allowing visits by appointment, or has an address that seems inconsistent with their industry, it may indicate a lack of legitimacy. If ever unsure, popping by for a visit is always recommended.


Follow the Links:


Many ghost dealers operate under different funnel names sending customers to one website to make their process easier. For example, you might find that the "Fun Guy Powersports" Facebook page links you to "www.financearide.com" or something similar. There are likely many other ghost dealers all pushing to the same URL to collect applications.


Look for Erratic Inventory:


Check to see if their advertised inventory is consistent. Ghost dealers may use photos taken from legitimate dealers, or private sale sites like KIJIJI. Use tools like Google Lens for a reverse image search to see if their posted inventory can be found elsewhere.


Check for a Lack of Photos:


Legitimate dealers typically showcase their inventory, staff, and showroom. If a website or social media lacks authentic photos and relies on generic stock images, exercise caution.


Read the Reviews Carefully:


It is common for new ghost dealers to purchase fake reviews to try and bolster their reputation to trick unsuspecting applicants. It is important to research reviews carefully, looking for inconsistencies. Some to watch out for are reviews posted in clusters over a few days, reviews that overuse the name of staff members or reviews that overstate specific services. On Google, you can quickly see how many reviews the individual has posted prior and even read them to see if they seem authentic.


Watch Out for High Pressure Sales, Targeted Demographics & Bold Claims:


Be wary of dealers making promises that seem too good to be true, such as extremely favorable interest rates, "guaranteed approvals" for everyone, or in-house financing. If the business in question appears to be focused on a specific race, it may be trying to exploit the demographic. Finally, if the salespeople are extremely high pressure, not only is that a turnoff, but it may be a warning sign as these dealers do not have a reputation that they need to uphold.


Keep an Eye Out for Cheap or Free Services:


Another item to consider when deciding if a dealership is legitimate is the use of free services. Many ghost dealerships try to keep their costs low with sole focus on advertising to draw in customers. One key indicator that you may be working with a ghost dealer includes using a non-domain email such as Gmail as their primary email. Another could be having a website created through a builder like Wix with watermarks indicating a non-paid plan. Finally, if the application is through Typeform or Jotform on a free plan with watermarks on display, it may indicate an untrustworthy dealership. While all of these are legitimate services and generally safe, it should be concerning for a business not to pay the minimal amount required to get on a paid plan to have watermarks removed, especially when you're dealing with purchases in the five-figure range.


A parody of a ghost dealership advertisement featuring ATVs in the background and fake website link

"Fun Guy" with a mushroom logo. Like fungi. Get it? Nevermind.


The rise of ghost dealerships poses a significant threat to unsuspecting motorcycle buyers seeking financing. By staying vigilant and being aware of the warning signs, you can protect yourself from potential scams. Always prioritize dealings with established, reputable dealerships with a physical presence to ensure a secure and transparent motorcycle financing experience. As always - thanks for reading! Your friend, Fred

For Further Reading Check Out:


Man surprised with the text "KIJIJI Scams: What to Watch Out for in 2023"

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