While everyone jokes about the cost of boating and how much money can be dumped into that “hole in the water,” we willingly invest a lot of money in our yachting passions. And whenever there’s money moving around, opportunists and dishonest operators are looking to turn a small profit into a big one. Or a tiny scam into a huge score.
Nobody wants to micromanage their yacht. You own a yacht to use it, not spend your time poring over invoices or counting bolts and filters to make sure you got what you paid for. The biggest scams are also not the most obvious ones, and there’s always a new one being invented.
We can’t prepare you for all of them, but we can alert you to the risks, and enjoy the boat you want without being a victim.
What’s a Scam?
What differentiates a true scam from mere terrible service, a bad job, or something that leaves you feeling cheated because promises weren’t met? If a company charges you a lot of money for a job, and then messes up the job because they couldn’t handle the work, is that a scam?
Probably not.
A scam involves intent, not just incompetence or poor judgment. The other party got your money and intentionally did not deliver the promised services or goods. You can protect against either, but scams can be harder to catch because they are trying to fool you.
Common scams in the yacht industry
Any time money changes hands, there’s an opportunity for someone unprincipled to take more than their share. And it’s often easier to steal a little from customers a lot of times than it is to swipe hundreds of thousands of dollars in a pass. But both can happen.
Work and Yard Scams
When your boat is in the yard getting work, you’re not on it watching everything. And you’re paying people to do technical and complicated things that are usually outside your area of expertise. How many yacht owners understand the detailed workings of all their yacht systems? If you can’t tell a turbocharger from a macerator pump, there are a lot of opportunities for someone to pull a fast one.
Read also: Should your Yacht Be in a Trust? Pros and Cons
Phantom Work
One way to inflate yard bills is to charge extra hours for work that isn’t necessary or even done. A good tipoff for this is if the final bill is far off of the initial estimates, or there’s no clear explanation for the work and hours needed. No warning about the additional hours is also a clue, though if you are told that more work is needed you should always get a revised estimate with a written explanation.
Excessive Markups
Many yards rely on the owner’s ignorance of what boat things cost. We hear many “marine” labeled items are up-charged versions of commonplace items. But many do have extra costs for marine needs, so everything seems high anyway. And parts specifically for boats are expensive. But there are retail prices for things that we can learn.
Paying $15.00 for a whole can of lubricant may not seem like much. But when you’re charged that $15.00 for a whole can when the yard only uses a few squirts from an open can they already have, those little things add up.
If they’ll overcharge for little things, you really need to watch the pricing on big-ticket items. Because paying $10,000 for a $3,000 part adds up a lot faster than small rip-offs on spray lube.
Unreasonable charges
There are many ways to work on a boat, and an excellent technician is efficient. If they show up to winterize your batteries, they may top up wet cells, disconnect the batteries, and lubricate the terminals all in one step. On a small boat with a couple of small batteries, this may only take an hour to do everything.
But when you get the bill, you might find a $100 flat charge for disconnecting the batteries, another $100 for lubricating the terminals, and three hours billed hourly for charging the batteries even though they were plugged in and left for three hours. And you end up paying a lot more than the hour or it took the technician to do the work.
Mystery Parts
Technicians who aren’t good problem solvers will often try to solve the problem by replacing parts before identifying the problem with proper diagnostic techniques. This approach is a problem because it’s expensive, and you end up paying for a lot of parts you don’t need. This is mostly incompetence, but it can be worse.
One scam involves telling you that you need certain parts, and then billing you for the work without actually installing the parts. They lied to you, assuming that you don’t have the technical know-how to realize that certain parts weren’t necessary. It is always appropriate to ask for the old parts, which can prevent this.
Purchase and Sale Scams
Purchase and sale transactions involve large amounts of money, and attract scammers looking for a big payout. Every step in the process has an opportunity for them, so it pays to know who you are working with. And not all of these scams are separate. You might find an Escrow Scam as the tool to steal your deposit, for example.
Private purchases or sales without broker involvement require extra care. Without skilled, professional protection, private deals are ripe for scams from either side of the transaction.
Deposit theft
Most contracts have provisions for surrendering the buyer’s deposit if they break the contract. It’s rare, but there are legitimate reasons a seller or broker may refuse to return a deposit. These reasons are in the sales contract, and the seller can only withhold the deposit if the buyer breaks the contract without a valid reason. No one should ever disappear or stop taking calls in the middle of a deal!
If someone represents themselves as an agent for a boat but doesn’t have the right to sell it, they can still take a deposit. And you may never see it, or them, again.
Surveyor Collusion (Seller, buyer, or broker!)
A buyer should always hire a surveyor directly and clarify that the surveyor works for them and not the seller or the broker. It’s not the surveyor’s job to make the deal happen or discount the boat, only to report on the condition of the boat to the buyer and no one else.
Regrettably, a small number of surveyors have collaborated with sellers, buyers, and brokers to manipulate the pricing on a boat during negotiations.
For sellers, a survey that shows excessive problems that don’t exist, or wildly overstates minor problems may be a tip that the buyer is trying to beat your price down with a faked-up survey. Don’t confuse this with a buyer who simply doesn’t understand the survey process. All used boats have some flaws, and none are perfect. It’s up to the broker to negotiate what is normal wear-and-tear and what is an unsafe flaw.
For buyers, a surveyor who colludes with the broker or seller may not present you with all the flaws in a boat, so you end up overpaying for a boat that needs more work than you expect.
The best protection as a buyer is to hire your accredited surveyor which isn’t recommended by the listing broker or seller.
Protection is tougher as a seller unless you’re willing to pay for your professional survey to counter any false claims about the condition. But if a buyer beats you up over price with a long list of survey “failings” and flaws, you may want a professional consult.
Fake and unneeded paperwork
There’s a lot of paperwork in a boat deal, and it is necessary. Someone has to do the paperwork, though brokerages charging you a commission rarely charge separately unless they need to contract it out to a third party.
But it’s easy to add in a few important-sounding sets of documentation that have no real meaning but cost some money to get done. Ask upfront about all the documentation and fees, and clarify what each one is for.
Excessive fees for management, maintenance, or sale
If you’ve gotten written quotes and a contract, it should be tough to add extra fees on top of what you’ve agreed. But that doesn’t mean someone won’t try.
It’s always a good idea to review your charges against what you expected and ask questions about anything that seems excessive. Large markups and extra charges always need an explanation.
Yacht quality misrepresentation
Staging a yacht is important, and an honest broker or seller will make a yacht look as good as it can. But they will also disclose any known flaws upfront. But a dishonest one will do everything they can to hide the true condition of the boat if they know of any problems.
The incentive is obvious, but the methods aren’t always. Some problems may be very hard to detect, and a seller or broker may gloss over them. Oil leaks are cleaned up, stained covers and cloth replaced, broken systems ignored or hidden, and a fresh coat of paint or varnish can hit a lot of issues.
The result is to extract a price on the boat it doesn’t merit instead of discounting it to reflect all the work the new boat needs.
Financial Duplicity
Read Also: YACHT BROKERAGE FEES: WHAT YOU SHOULD KNOW
There are many general financial scams today that work well with a boat transaction, too. They’re easiest to run in private deals without a reputable broker in the mix to flag suspicious activity.
- Fake bank checks/Overpayment scam. A buyer tries to pay with a cashier’s or certified check worth more than the required payment and requests the seller return the extra as cash. The bank check takes a couple of days to clear but comes back fake.
- Fake escrow. The buyer or seller suggests a 3rd party escrow “for safety,” but it’s not a mainstream escrow service. One party wires funds and the other party disappears without any further communication.
- Overpayment with fake escrow statement. A buyer asks for payment information for a legitimate escrow like Paypal, then sends you a fake payment notification over the agreed amount. Then they ask you to refund the extra to them.
Buyers commonly start these with e-mail, especially when reaching out to direct sellers. There are some red flags to watch for, including:
- Terrible grammar.
- Little or no understanding of the contents of your ad or what they are buying or selling.
- Agreements to buy the boat without looking at it.
- Offers to pay more than the asking price if there’s a quick deal.
How to avoid scams
Knowledge is your best weapon, next to a good partner in your transaction. The more you know about what you’re paying for, the harder you are to fool. And the more you know about who you’re doing business with, the easier it is to scare away the phonies and fakes trying to scam you.
Find your own surveyor
It’s crucial that buyers get their accredited surveyor, and establish upfront what expectations are and who they work for. A proper survey on a boat shakes out a lot of potential problems.
And if a seller doesn’t want a survey, or doesn’t want a survey from your surveyor, walk from the deal. Something is up.
Hire a reputable broker
Whether you’re buying or selling, a solid broker can make all the difference in a smooth, scam-free deal. Make sure they’ve been in the business for a while, and have done deals like yours. Ask for references and ask around about them. If you have questions about their paperwork or how they plan to handle your deal, ask. An honest broker will always give you a straight answer, not a tap dance that leaves room for shenanigans.
Check References and Paperwork
Always check references. Don’t just pretend you did, make the call, send the e-mail, and have a genuine conversation about the broker or surveyor you’re planning to work with.
Don’t ask yes or no questions, because scammers can fake a reference for simple questions. A fake reference won’t have as much information about the deal or boat, and won’t be able to answer open-ended questions so easily.
How do you know your yacht broker isn’t trying to scam you?
At some point, we have to decide, take a risk, and trust someone. But how do we know a broker is solid, that they’re someone with our best interests at heart?
The first thing to do is talk to them and ask them questions. And see that they ask you questions as well, and pay attention to what they ask. The broker will assess your buying capability, but they also should try to find out what you want in a boat and what you plan to do with it.
A good broker will sell you a boat you want that meets your needs and isn’t just aiming to dump a boat, good or bad, on the first buyer who walks in.
Check credentials and transaction history
Boat broker credential requirements vary from country to country, and in the U.S. it’s different from state by state. It’s not tightly regulated by any international standards. So checking credentials can be a challenge if no credentials are required by law.
There are organizations like the Yacht Brokers Association of America that recommend the Certified Professional Yacht Broker program (CYBA). Other countries may have similar programs. These should highlight experienced brokers with training who have passed tests on yacht transactions and deal ethics.
You can also look into the transactions that a broker has done. It’s best if they’ve handled yachts like the ones you’re looking for or selling. Ask about deals they’ve done and boats they’ve sold, and if you can see archived listings or other information to verify.
Find boating enthusiasts
Anyone can sell anything, in theory. But when looking for a broker, you’re looking for a sailing or yachting enthusiast. Someone who knows boats because they love boats.
A lot of boat enthusiasts end up working in yacht brokerage because they want to make a living close to something they love. You want one of these brokers, instead of someone who’s never set foot on a boat for fun and might as well be selling cars or dishwashers.
When you interview a broker, look for that enthusiasm for yachting. Ask them about their experience. Have you ever known a boater who won’t talk about their boat or what they love about boating if you ask?
Get second opinions
If something a broker says doesn’t make sense to you, talk to other brokers to see if they say the same thing. A broker relationship is a business partnership, and you need to be comfortable with your partners. Shop around and make sure you’re hearing the same things about the boats and market, especially if you can’t get answers that make sense to you from one broker in particular.
Yacht transactions take time
There are very few instances where a yacht deal has to happen on a drop-dead schedule. A solid broker will take the time to make sure they’ve searched the entire market for you, that sea trials and surveys are thorough, that all the paperwork is in order, and that you’re prepared for a successful deal.
If a broker is pressuring you for a quick transaction or to move fast, watch out. No one boat is the only boat that will ever make you happy, so find a broker who gives you the time to get your boat right.
Certified Yacht Brokers with over 25 years of experience
Windward Islands Yachts has offered professional brokerage and yacht management services to buyers, sellers and owners since 1998. We have CYBA certified brokers on our full-time staff, and are members of the International Yacht Brokers Association (IYBA), the Virgin Islands Professional Charter Association (VIPCA), European Committee for Professional Yachting (ECPYC) and the Federation des Industries Nautiques (FIN).
Based on the Cote d’Azur in France with a presence in the Caribbean, the U.S., Europe and Asia, Windward Yachts is a full-service firm to meet all of your yachting needs. Our founder is a yacht enthusiast who brought his love of the sea and boating to build a global business, and that love drives how we serve our clients.
And yes, of course we’ll provide references!
