Since May 2011, a dedicated hotline established by Consumer Affairs Victoria has taken 430 reports from the public about dodgy unlicenced kerbside and backyard car dealers.
The Victorian Minister for Consumer Affairs Michael O'Brien said that multiple court actions had been launched as a result.
"What this shows is that the mechanisms (the Victorian Government has) put in place to report suspect activity are working," Mr O'Brien said in claiming "significant progress" against unlawful traders.
The NSW government is also concerned about the extent of this illicit industry.
It says "these shonks" - unlicenced traders - continue to operate despite widely publicised prosecutions by the NSW Department of Fair Trading over recent years, and warns that "there are plenty of sharp operators prepared to take private car buyers for a ride".
The issue is not to do with genuine private sales.
The target for these actions is unscrupulous operators who masquerade as private sellers, commonly selling dozens of cars - and commonly using different mobile phone numbers - to unsuspecting buyers.
These cars are often openly displayed along the grassy verge of busy roads, or scattered along service roads with a 'For Sale' sign and a mobile contact number.
But which are genuine private sales and which are dodgy? That's the risk for buyers.
The NSW Department of Fair Trading warns consumers to beware of the backyard dealers who buy cheap "clapped-out" cars, perform a little cosmetic surgery and sell them through print and online car classifieds, or from the side of the road.
It also warns that "statistically, there is a one-in-five chance vehicles offered for private sale in NSW will be carrying a debt for which the new owner could become liable".
The sale of stolen cars spirited across state borders is also an issue that private buyers need to be aware of when buying a car privately from a stranger.
There are some protections however.
The national Personal Property Securities Register (PPSR), a database into which all state jurisdictions feed vehicle identifier, registration and ownership details, can be accessed by private buyers to check the bona fides of a vehicle they are considering purchasing privately.
Through the PPSR website, buyers can check the details of a car prior to handing over hard-earned savings (although fees apply).
The information provided on a PPSR Search Certificate shows whether money is owing on the car (and could be repossessed); its registration status, and whether recorded as stolen or written-off.
The Victorian Government is also working with local councils, VicRoads, the Victorian Automobile Chamber of Commerce and Victoria Police to identify and pursue unlicensed traders.
Since May last year, Consumer Affairs Victoria has undertaken compliance and enforcement activities in relation to more than 170 motor car trader cases.
Victorian Automobile Chamber of Commerce Executive Director David Purchase said he supported the Minister's initiative, saying that consumers should always buy from a Licensed Motor Car Trader and therefore obtain the warranty protection under the Motor Car Traders Act and the Guarantee Fund.
"There are too many unscrupulous and unlicensed people trading in motor cars from home or the kerbside that are ripping off unwary and unprotected consumers," Mr Purchase said.
In Victoria, to dob in a suspected unlicensed car trader call 1800 351 591 or visit www.consumer.vic.gov.au
To access the Personal Property Securities Register, go to: www.ppsr.gov.au