Buyer beware: Title washing can keep you from knowing where your car has been

A used car can be a bargain. But you might not know that car's full story -- past repairs, past accidents or even past encounters with natural disasters. It may even be possible that the person who sold you the car is trying to hide a car's history through a scam called "title washing."
Title washing is not just verbally concealing a vehicle's history from a buyer. Instead, the seller alters the paperwork. In most states, vehicles that have been severely damaged (in a flood, for example) and then repaired or rebuilt are required to carry branded titles -- titles that clearly indicate the car's rough past. Such titles might be branded with designations like "salvage," "rebuilt" or "junk," according to Fight Fraud America, a grassroots education campaign that focuses on insurance fraud.
Such brandings can make the car difficult to sell for a variety of reasons:
  • Vehicles with salvage titles bring lower resale prices.
  • Salvaged vehicles can be harder to insure, which can cause problems for buyers.
  • Most buyers will be extremely wary of buying salvaged vehicles because of the potential for hidden damage, like electrical damage, which can be both dangerous and expensive.
Luckily for fraudulent sellers (and unluckily for buyers), some states' laws are more lenient than others, according to the Insurance Information Institute. Sellers can simply bring cars to a state in which branding isn't required and re-title them. The undesirable label disappears, leaving the title clean, and the seller then can bring the vehicle back to the original state and sell it to unsuspecting buyers.
Title washing not only rips of used car buyers. It also puts more dangerous cars on the roads. Salvaged vehicles can have serious damage that might not be apparent on the used car lot. If that damage involves the vehicle's wiring, brakes, structure or the engine, it could lead to serious car accidents, auto insurance claims and, eventually, elevated premiums -- not to mention deaths and injuries. Fight Fraud America cites an incident in which a car's roof became separated from the body during an accident. The seller had improperly rebuilt the car after a previous rollover accident and had hidden the evidence with paint.
Although states and consumer groups are stepping up their efforts against title washing, car buyers still need to be vigilant about their purchases. Getting a vehicle history report can give you a complete picture of the car's past. The National Insurance Crime Bureau also provides a database called VinCheck that allows potential car buyers to look up a car's history via the vehicle identification number.

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