Sneaky Used Car Scam Could Cost You Thousands
Filed under: Consumer Ally, Car Buying, Consumer Issues, Consumer Protection, Ripoffs & Scams
Used cars and scams go together like old bread and mold: You have to be vigilant to avoid a problem. A lot of people will need to keep wary this year, as Edmunds.com notes, with 18,722,399 used cars sold in the first half of 2014.
Buyers are used to taking test drives and asking mechanics to give a vehicle the once-over to be sure they get what they’re expecting. However, a scam that won’t be caught that way is title washing.
“It is a paper scam that has physical consequences,” said Chris Basso, public relations manager of Carfax.com, in an interview with DailyFinance. “Con men are altering vehicle documents and taking advantage of state laws that differ when it comes to branded titles.”
You Say ‘Salvage’; I Say ‘Rebuilt’
At the heart of the issue are cars that have received major damage, like being flooded or rebuilt after a major accident. When a car has such significant issues, its value drops, often to half of what it would have been for an unharmed vehicle of the same mileage, age, model and apparent shape. States create a branded title that has a term such as “salvage,” “flood” or “rebuilt.” When you buy a car, look at the title for such a status.
In title washing, the cons take a damaged car from one state into another. They physically alter the first title, bring the car to another state that does not use the same branding language or use stolen blank titles to forge a non-branded title.
The cons, often using false identities, register the car in the second state. The new registry either doesn’t know of the problem in the first state or literally cannot use the same branding language and so leaves it off the new title.
The Damage Is Hidden
“They process so many in one day that some of these can easily sneak through,” Basso said. “[The crooks are] able to get a clear title, and they’re selling those cars to buyers [who are] are unaware the vehicle had major damage in the past.”
By changing the apparent status of the car, the fraudsters can effectively double its value. Someone unsuspecting then pays too much.
Carfax traces the history of titles by vehicle Identification number, so it can notice the move from a branded to a clear title. About 800,000 vehicles — found in every state — have titles that have likely been washed, mostly by individuals, according to the company. Although some people may have washed titles unintentionally, the “overwhelming majority” are the result of someone trying to fool a buyer.
To avoid a title wash scam, insist on looking at the physical title. “You want to see if the seller’s name on the title matches the [name of the person] selling it to you,” Basso said. “Oftentimes these people aren’t the registered owners of the car.” By creating false identities, crooks make it impossible to trace the transaction back to them. Basso also suggested using a used car information service (Carfax charges $39.99 for one version) to discover any indications that the title has been washed.
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