Any purchase made by one person on behalf of someone who is unable to legally do so is a straw purchase. Although there can be many kinds of goods bought this way, the most common are firearms, automobiles, real estate, and alcohol. Some transactions involve the use of counterfeit documents and stolen identities, especially when real property is involved. If criminal intent can be proven, these purchases may sometimes be punishable by fines or imprisonment.
A person who conducts a straw purchase is known as a straw man. In most instances, these purchases are illegal both for the person conducting the transaction, as well as the individual who receives the goods. For this reason, many contracts for firearm sales warn buyers against conducting a transaction on behalf of someone else.
Before a transaction can be considered a straw purchase, the buyer must be aware that he is obtaining goods or services for someone else because the other party is unable to do so legally. This can be because that person has poor credit in some cases. Other times, it is because they might be too young to acquire certain goods, such as alcohol or tobacco. It can also be because federal firearms laws prohibit certain groups of people from buying guns.
Straw men may deceive lenders by giving fake names, identification, or social security cards. Scammers often seek individuals to act as an agent when dealing with financial institutions, providing them with the necessary documentation to carry out the straw purchase. These individuals often disappear shortly after the transactions are completed, taking the illegally acquired goods with them. If the scheme is eventually uncovered, the straw man can likely expect to be held accountable for his actions as well as that of the scammer.
Although a straw purchase is an illegal act, a retailer or lender is not at fault if he had no knowledge he was dealing with a straw man. Even so, people who suspect unauthorized purchases are being conducted should notify authorities. This is especially true if it appears someone has provided false identification documents.
An individual who completes a straw purchase with intent to further a criminal action can be punished in many jurisdictions. This could be whenever firearms are illegally obtained so that a crime can be committed. It could also include providing alcohol to minors. The penalties for committing this act vary from one country to the next, but often include fines, community service, or even jail time.