Hurricanes, Floods and Used-Car Sales
Katrina and Rita prompt call for national title database
Created by Cathy Nikkel
After every flood disaster, media and consumer groups start waving the fraud red flag. Beware, they caution, of con men that slap a quick cosmetic job on a moldy vehicle totaled and sold for scrap in the aftermath. Every time, some unsuspecting consumers drive a vehicle home that will begin to mold, mildew and revert to the disaster it was before the cosmetic job. This time around, though, the National Automobile Dealers Association (NADA) is calling for legislation to develop a national database that would, at the click of a mouse, provide vehicle history and title information anywhere in the 50 states.
Consumer Plan
Addressing a press group in Michigan, NADA Chairman Jack Kain outlined a plan that would work for consumers, asking:
1. Insurance companies to make the Vehicle Identification Number (VIN)-based information on totaled vehicles accessible to the public
2. Automakers to disclose the VINs of cars and trucks totaled by Katrina and Rita and future storms or natural disasters
3. Legislation that would make state Departments of Motor Vehicles (DMV) offices work with private data vendors to create an electronic vehicle title data system that is uniform and easily accessible
A vehicle's title documents can include information on natural disaster damage as well as when a vehicle is declared "totaled" after an accident. "All we need is a list of VINs for totaled vehicles, and the insurance companies should provide this," said Kain. In the aftermath of Katrina and Rita, the National Insurance Crime Bureau is collecting the VIN numbers of flood-damaged cars and plans to distribute those numbers to head off the wholesale hoodwinking of the car-buying public.
National Standard
Some vehicles will still get through the system, because it is full of holes. Damaged vehicles can be bought for scrap, taken across state lines, power-washed and buffed then re-titled with a clean bill of health. A national standard for titles and a title history that follows a vehicle through all 50 states could curb the problem. As it is now, states have different laws about how much information a title includes and different language to describe damage. They are not now required to carryover information from a different state. Creating a national database, open to consumers on the Web, would allow a consumer to trace the real history of the vehicle they are considering.
The dealers association is urging Congress to take action by using incentives to make state vehicle title laws more uniform. Such a law should encourage the states to carry forward titling from other states. "No one should be able to wipe a title clean simply by obtaining a title from another state," Kain said. "The front of each title should carry all the brands of the states where that vehicle has been titled," he added.
The dealer group estimates the number of flood-damaged vehicles resulting from Katrina and Rita at 570,000, and cautions that about half of those vehicles, or 285,000, will be cleaned up and sold in the used car market by shady dealers.
Inspection Tips
A national database is still just an idea. It is waiting to be drafted and passed, funding is still being appropriated and the DMVs are still being prodded to create state databases. In the meantime, consumers are still at the mercy of the bad guys. Anyone buying a used car in the next year or so should take steps to ensure they will not become a flood victim. While there is no sure way to detect vehicle flood damage, NADA offers 10 inspection tips that may be useful in detecting significant water damage. At a minimum, a prospective buyer should:
1. Check the vehicle's title history. It may state whether it has sustained flood damage. You can check the VIN history at the NADA website:
www.nada.org. Click on the consumer section at the VIN prompt and type-in the VIN of the vehicle you are considering.
2. Examine the interior and the engine compartment for evidence of water and grit from suspected submersion. Recently shampooed carpet may be trying to mask a much bigger problem than spilled coffee.
3. Look under the floorboard carpet for water residue or stain marks from evaporated water not related to air-conditioning pan leaks.
4. Inspect for rusting on the inside of the car and under interior carpeting and visually inspect all interior upholstery and door panels for any evidence of fading.
5. Check under the dashboard for dried mud and residue, and note any evidence of mold or a musty odor in the upholstery, carpet or trunk.
6. Check for rust on screws in the console or other areas where the water would normally not reach unless the vehicle was submerged.
7. Look for mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power-steering pumps and relays.
8. Complete a detailed inspection of the electrical wiring system, looking for rusted components, water residue or suspicious corrosion.
9. Inspect the undercarriage of other components for evidence of rust and flaking metal that would not normally be associated with late-model vehicles.
10. Have a certified mechanic inspect the vehicle before purchasing.
These steps are not foolproof, but could help consumers avoid a disastrous purchase, until they can tap into a national title database before buying a previously owned vehicle.
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