Title Washing Cleans Up Cars’ Murky Past

Differences in state laws and definitions enable title washing scams: Internet Scambusters #634

Hundreds of thousands of cars on our roads today may be hiding a secret past, concealed behind a scam known as title washing.

At best, these vehicles could be worth a lot less than new owners paid for them; at worst, they could be death traps because of botched repairs.

In this week’s issue, we’ll tell you how the scam works and what you can do to avoid being hoodwinked. It could save your life.

Let’s get started…

Title Washing Cleans Up Cars’ Murky Past

Differences between rules and word definitions used in individual states are enabling crooks to hoodwink used car buyers with a scam known as title washing.

Up to 800,000 autos on our roads today may have been totaled and rebuilt without the owner knowing this critical part of their history.

The truth gets lost in the system when a new title document is issued, omitting details of a car’s previous status.

The scam is made possible because some states use different words or definitions for the terms — or “brands” as they’re known — used to describe a car’s condition.

Wikipedia explains, for example: “In some cases, the criteria to define a ‘total loss’ vary — some base the cutoff amount on the nominal value of the vehicle in working condition, others look instead at the value of a working vehicle minus the value of a collision vehicle as scrap, salvage or parts.

“The percentage of the original value at which the ‘total loss’ label is applied also varies.”

In other cases, some states may not even use the title terms we’re talking about such as “junk,” “irreparable,” “salvage,” and “rebuilt.”

Here’s how the scam works:

* A car is badly damaged or written off in an accident or as a result of a natural disaster, such as a flood.

As we’ve previously reported in Scammers Dump Flooded Cars on Unsuspecting Buyers, in some cases, there may be no reference to this on the title and the car is simply sold.

Or it’s sold without the buyer checking the title document.

* Assuming the condition is reported on the title, a dishonest dealer or even an individual buys it at an extremely low price.

* The damage is repaired. This may be done professionally or it may be an amateur job that poses severe dangers.

* The crook then takes the title document to another state where the terms are not recognized or are different in some way, so the new document is issued without the crucial damage references.

* The car is then resold as “clean” to an unsuspecting buyer at the regular price of an undamaged car.

Or it may be sold as “rebuilt” when the job hasn’t been done properly. See below.

How to Avoid this Scam

What can you do to protect yourself against title-washing scams?

The most obvious action is to obtain a complete, tracked history of the vehicle.

Although a new title may not record its past, tracking the car’s history via its Vehicle Identification Number (VIN) should reveal everything that’s happened to it.

We say “should” because, as reported in an earlier Scambusters issue, VIN Switching: Identity Theft for Autos, crooks can also switch VINs, further concealing the true history of an auto.

There are a number of companies offering VIN-based records, the best known probably being Carfax and AutoCheck, but there are several others including some that claim to be free — though we can’t vouch for them.

The National Insurance Crime Bureau (NICB) also offers a free VIN checking service.

Beyond this, it makes good sense to ensure you’re buying from a reputable dealer, if you’re not buying from an individual seller.

You can also request a written title guarantee from a dealer, though they may not be willing to provide one.

In addition, check that the name of the seller, individual or dealer matches the one on the title document. It’s a red flag if they’re not.

One other thing: Even if a title does declare that a salvaged car has been rebuilt, you need to be sure the work has been done professionally and safely.

Again, states have different rules for licensing repair workshops and inspecting their work before issuing a new title.

As we suggested earlier, some so-called repairs or rebuilds are dangerous, potential death traps in fact.

Many cases have been reported of vehicle repairs that should have been done using welding but actually have car sections simply bolted together. Bolted joins like these can collapse at any time.

Check with your vehicle-licensing department on their rules and, if in any doubt at all, have the car examined by an independent auto expert to ensure it’s safe to drive.

Finally, if you have evidence you’re a victim of title washing, seek an immediate refund from the seller.

You’re in a better position if the seller is a legitimate dealer because he otherwise faces having his license revoked.

Also, report the crime to law enforcement and/or the NICB (at 800-TEL-NICB).

Despite its name, title washing is a dirty business. Make sure you don’t get caught up in this nasty piece of laundering.

Alert of the Week

You may not have a fax machine on your desk but you can still send or receive one via many Internet-based services.

But watch out! If you get an email claiming to be from legitimate provider eFax notifying you of a fax that’s waiting for you, don’t click the link.

It looks and reads like it’s an eFax.com link but hidden inside is actually a link to a scam site in Hungary.

In other reported cases, the message contains an attachment that is equally dangerous.

To access a genuine incoming eFax, you need an account. If you don’t have one, the fax likely is not genuine.

If you do have an account, go to the company’s secure website and access your incoming faxes there.

Time to conclude for today — have a great week!