Seen it work for a friend, saw my mom get kind of screwed (not horribly I guess) and my brother get really screwed (as in the car should have had a salvage title). Carfax was done on both of them, what a waste of time. Carfax is pretty worthless sometimes because people can get in a huge crash (i.e. wrap the car around a phone poll) but as long as there's no police report/insurance claim, carfax will never know. So, the person can pay out of pocket just to get the car semi-working and then dump it...the perfect place to dump is ebay.
My advice: only buy a car off of ebay if you can personally check it out or have a trusted friend/mechanic check it out. It's always good to have a mechanic check any car out, but especially one for sale on the internet. Some people do ok on ebay, but I think a good number get anywhere from a little screwed to extremely screwed. And to add, my brother's car came from a dealership (or so they called themselves). So just b/c it's from some dealership in TX or whatever, does not make the description legit.