Hurricane Harvey Once Again Raises Fraud in Auto Titles

AutoInformed.com

It’s big business for professional con men to quickly clean up and resell damaged cars miles from where the flooding occurred.

Hurricane Harvey, aside from the ill-preparedness of government and the vast human tragedy that occurred, could hurt people far from the storm if they buy a flood car with a fraudulent or “washed” title. “Submerge your dreams,” says Dani Liblang, founder of The Liblang Law Firm in Birmingham, MI. “The thought of a late model, low priced car is enticing, but even the muffler or certainly the computer from a car submerged in the hurricane waters flooding Houston, Texas, and Louisiana, could be damaged beyond repair.” (See AutoInformed: More Flood Cars Back in Use – Buyer Beware, Waterlogged Flood Cars – Tide Rising as Titles Falsified, Chevrolet Donates Damaged Vehicles to Train First Responders)

“Re-badging” or “title washing” is a federal crime, according to the Department of Justice and should be reported immediately. The Federal Trade Commission’s Used Car Rule requires dealers who sell six or more vehicles to post a Buyer’s Guide form in every used car on the lot. This poster would list all the possible defects that could occur on this vehicle.

Deceptively selling flood cars is illegal, “but that doesn’t stop some used car dealers and mechanics. Cars damaged by Tropical Storm Harvey will be showing up on the lots in the next few months. Be prepared to make sure you don’t drown in a deal that’s too good to be true,” says Liblang.

FTC: Before You Buy a Used Car

Whether you buy a used car from a dealer or an individual:

  • Test drive the car under varied road conditions — on hills, highways, and in stop-and-go traffic.
  • Ask for the car’s maintenance record from the owner, dealer, or repair shop.
  • Determine the value of the vehicle before you negotiate the purchase. Check the National Automobile Dealers Association’s (NADA) Guides, Edmunds, Kelley Blue Book, and Consumer Reports. Some of these organizations charge for this information.
  • Research the upkeep costs for models you’re interested in, including the frequency of repairs and maintenance costs.
  • Examine the car using an inspection checklist. You can find checklists in magazines, books, and on websites that deal with used cars.
  • Check whether there are any un-repaired recalls on a vehicle. Start by asking the dealer if the vehicle you’re considering has a recall. You also can check yourself by entering the VIN at NHTSA, or by calling the its vehicle Safety Hotline at 1-888-327-4236. If there is a recall, ask the dealer to fix it, or to give you information showing it was fixed. Keep in mind that federal law doesn’t require dealers to fix recalls on used cars, so you might need to get the repair done yourself. But don’t wait — according to NHTSA, all safety recalls pose safety risks and, left un-repaired, might lead to accidents.
  • Get an independent review of a vehicle’s history. Check a trusted database service that gathers information from state and local authorities, salvage yards, and insurance companies. For example, the Department of Justice’s National Motor Vehicle Title Information System (NMVTIS) offers information about a vehicle’s title, odometer data, and certain damage history. Expect to pay a small fee for each report. The National Insurance Crime Bureau (NICB) maintains a free database that includes flood damage and other information. You can investigate a car’s history by its Vehicle Identification Number (VIN). You also can search online for companies that sell vehicle history reports. If the report isn’t recent or you suspect that it has missing or fabricated information, verify it with the reporting company. The information in the reports may not be complete, so you may want to get a second report from a different reporting company. Some dealer websites have links to free reports.
  • Consider hiring a mechanic to inspect the car.

 

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.

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One Response to Hurricane Harvey Once Again Raises Fraud in Auto Titles

  1. While Hurricanes Harvey and Irma (see AutoInformed.com on Hurricane Harvey Once Again Raises Fraud in Auto Titles) impacted as many as 1 million vehicles, according to Cox Automotive and Kelley Blue Book analysts, the effects of these events extend beyond those with severely damaged vehicles. Used-car prices are likely to spike – the result of lower supply and higher demand. In addition, used-car shoppers – even those beyond the impacted regions – need to be careful to avoid purchasing a flood-damaged vehicle from unscrupulous parties. Whatever the circumstance, Kelley Blue Book’s expert editorial team is here to provide guidance.

    Affected Vehicle Owners

    Q: My car got flooded; what do I do first?
    A: Let’s begin with what you shouldn’t do: Don’t try to start the car. If flood water has entered any number of systems, you could cause more damage. If you have comprehensive insurance, your best bet is to call your insurance company. If you don’t have applicable insurance, you’ll need to assess the cost to repair the damage (Alliance Inspection Management is a Kelley Blue Book partner and will come to you), then weigh your options considering a multitude of factors. Either way, it can’t hurt to open the doors and windows, give the interior a thorough going-over with a wet/dry vacuum and perhaps even pull up the carpet, all to help dry out the car and prevent mold growth.

    Q: Is my car totaled?
    A: A general rule of thumb is that insurance companies will consider a car a total loss if the water level reached up to the dashboard, behind which exists a variety of electronic components. Depending on how much you might owe on the car, how much you could get by selling the car to a dismantler, how long you plan to keep the car, and a variety of additional factors, you might be wise to use the same benchmark. A big factor to keep in mind when weighing the financials is that a car’s resale value can be severely reduced by any sign of flood damage, whether or not it’s officially noted on the car’s title or vehicle history report.

    Q: Should I keep making my monthly car payment?
    A: Talk with your vehicle finance company. Many manufacturer-related financing arms — Ford Credit, GM Financial, Toyota Financial Services, etc. — are offering generous payment flexibility to affected owners.

    Used Car Shoppers in Affected Areas (and Beyond)

    Q: What’s the surest way to avoid buying a flood-damaged car?
    A: Obtain a vehicle history report (Autocheck is a Kelley Blue Book partner) and visually inspect the vehicle for the many telltale signs of flooding, including silt residue under the carpet or under the dash. If you can’t tell or you’re not sure, pay the relatively small fee to have a mechanic evaluate the car (which is never a bad idea any time you buy a used vehicle).

    Q: Can I get a great deal on a flood-damaged car?
    A: Generally speaking, we recommend steering far clear of any vehicle that’s been involved in a flood. Given the higher likelihood of future problems and the eventual resale-value implications, the chances of finding a diamond in the rough are pretty slim.

    Q: I don’t live anywhere near Texas or Florida; do I need to be concerned?
    A: Yes. Unscrupulous parties can obtain a flood-damaged car for very cheap, “clean” the title by registering it in a different state, and then sell it in another state for full value by passing it off as an unaffected vehicle.

    To discuss this topic, or any other automotive-related information, with a Kelley Blue Book analyst on-camera via the company’s on-site studio, please contact a member of the Public Relations team to schedule an interview.

    For more information and news from Kelley Blue Book visit http://www.kbb.com

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