Full disclosure. It may sound counterintuitive for someone selling a used car, but you — the buyer — would appreciate it.
As it happens, not every salesman is gracious enough to fully disclose the background of their wares. In Massachusetts, for instance, some scammers are trying to sell salvaged cars flooded by Superstorm Sandy by using faked Oregon titles that don’t flag them as salvaged.
Spotting a vehicle with a fake title that is being fraudulently resold takes a bit of gumshoe-ness from the buyer. Why would you want to spot whether your vehicle’s title is fake? Because not knowing that your car has been salvaged because of damage from flood waters, for instance, could have serious safety and insurance implications.
If a title is faked, it’s usually discovered at the stage of inspection from an insurer, according to Donna McKenna, vice president of communications with the Massachusetts Association of Insurance Agents. At that point, if the buyer hasn’t inspected the car themselves professionally, an insurer will usually find out about unmentioned damage and deny coverage.
This means that the car you just bought may be uninsurable and, as a result, legally undrivable.
Some experts offered us tips on what kind of detective work is needed when it comes to buying a used car.
Before the Deal Is Sealed
That used car may look like a must-have, but there’s some research to do before the deal is done.
If possible, inspect the vehicle with your own trusted technician or mechanic.
Something that is always possible (and should be done by all consumers) is running the car’s vehicle identification number through title databases to see if there is history of it being totaled, salvaged, flooded, or other events that are legally required to be noted in a vehicle’s background.
Here are four free databases that consumes might find useful:
- The National Insurance Crime Bureau’s VINCheck report
- Carfax’s flood damage VIN check
- The federal National Motor Vehicle Title Information System
- Experian’s AutoCheck report
A mark on a vehicle’s history doesn’t doom the car to a junkyard or its seller to the jailhouse. Frank Scafidi, spokesman with the National Insurance Crime Bureau, told Online Auto Insurance (OAI) that a used-car sale is above board as long as the vehicle’s full background is disclosed to the person buying it.
“The thing to remember is one word: disclosure,” he said. “As long as the parties are aware that a vehicle was flooded or was declared as salvage, then there is no crime or fraud.”
Better yet is that some “mechanically-inclined” buyers can nab a “pretty good bargain,” Scafidi said, by bottom-dollaring a deal for a salvaged car and stripping it for parts.
“Many parts on water-damaged vehicles are perfectly fine once cleaned up,” he said.
But don’t expect a previously flooded vehicle to be restored to full working condition if you buy it as a whole.
“Water and electronics don’t mix,” said Scafidi. “The newer the vehicle, the more it is going to have all kinds of technology running its systems. Bottom line, if the instrument panel has been inundated, you might want to leave that one on the lot unless you want the parts.”
Tell-Tale Signs of Flood Damage
The Property Casualty Insurers Association of America (PCI) also warns consumers against the sometimes irreparable damage water can inflict on cars. Though previously flooded cars can be “a very economical option” for used-car buyers, PCI’s Bob Passmore said, “there is always a chance that there will be problems down the road with corrosion or of malfunctions in the electrical systems.”
PCI also offers consumers some adviceon how to spot a vehicle’s flood history on their own:
- When inspecting the car, check carpets and seats for signs of moisture, especially the trunk. If new, does the carpet match the rest of the vehicle’s interior?
- Look for signs of corrosion or rust that collect on door hinges, hood springs and between the door and body of the car.
- Check for moldy odors.
Some other signs can tip you to a seller trying to hide something about the sale:
- If you see any of the signs above and they don’t match the title the seller shows you. Most states require a history of salvage, while others require more detail about why the car was branded as a salvage. Finding a car with wet carpets without mention of any salvage or flooding in the title should give you pause about its purchase.
- If you see an out-of-state title. However, this isn’t a guarantee that the seller is trying to sell you a title with faked or incomplete history. (They may just have actually bought the car out of state.)
If You’re an Unfortunate Victim
The often-used term “as-is” really paints the buyer into a corner, leaving them at the mercy of the seller once money changes hands.
Those sellers, if criminal, will often disappear. Scafidi said the online used-car sales have proved easy money for criminals.
“Once a transaction is completed, good luck trying to get your money back,” he said.
McKenna said there is little recourse for consumers in the state trying to get their money back after a used-car deal gone bad.
They can, however, file a complaint with the state attorney general’s office.
Scafidi said that buyers who find they were hoodwinked into a used-car purchase have a little hope if they bought the car from a “legitimate dealer.”
“There is a better chance that they can work out some kind of resolution because it may be that the dealer got burned buying the car as well,” he said. “Moreover, a legitimate dealer will work with a customer to save any bad press that might flood the dealership over this kind of transaction.”
‘Crooks Will be Crooks’
An announcement from Massachusetts’ Registry of Motor Vehicles (RMV) offers a real-life example of what we’ve discussed: titles of cars flooded by Superstorm Sandy were “scrubbed” clean in Oregon, and then those “washed” titles showed up as used-car sales in western Massachusetts.
The RMV said dozens of those used cars were discovered. If bought, those used cars could falter later on down the line, leaving the consumer with a dud buy.
Red flags like out-of-state titles that we previously mentioned show up in this real-world example.
Massachusetts consumers should also look for other markers specific to this case like: a damage report filed in late October (when Superstorm Sandy hit) and salvage titles issued from New York or New Jersey (where Superstorm Sandy hit hardest).
Scammers are trying to use out-of-state titles, according to McKenna, because Massachusetts requires that titles be branded with the reason for salvaging a vehicle.
“We brand all of our salvage titles so that you know what caused the damage,” she said. “If it was a theft, it would say theft. If it was flooded, you would know because it would branded as fresh or saltwater. That’s a hint. But if there aren’t any obvious signs on a title, the consumer has to do their due diligence to find out for sure what they’re buying.”
And don’t think it only takes big disasters like Sandy to bring out used-car criminality; rashes of washed titles and scrubbed vehicle histories can follow any one of the frequent flood events that hit the U.S. annually.
The AAA in Oklahoma warned consumers there in May that spring flooding in neighboring states could mean used cars with falsified documents ending up as possible sales.
As it comes to Sandy, McKenna said she wasn’t surprised by the scams turning up so many months after the catastrophe hit last October.
“Crooks will be crooks,” she told OAI. “Maybe they thought that if they laid low for a while it would be as big of an issue.”