Severe Weather Raises the Risk of Title Washing Fraud
The laws concerning vehicle documentation differ from state to state and from the east to the west coast. This allows unscrupulous dealers to use “title washing” to sell cars especially after major disasters like Katrina storm. Title washing helps the owner remove salvage or flood damage branding to minimise their loss.
When insurance companies label a car as flood damaged, they will put a brand on the title as a “Flood Victim”. If the car was involved in an accident and it would cost more to repair it than the insurance worth, it will be branded as “Salvage”. The owner is paid the value; the car is kept by the insurance company and then sells the car to an auction. Chop shops, car dealers, and crooked rebuilders buy these cars at extremely low prices, put a little money into them and then wash the titles before reselling them.
The scammer transfers the salvage title to a state that does not recognise the brand, hoping that the new title does not show salvage or any other branding. If it still shows a salvage title, they will keep trying other states until the title comes back with no branding. This result is a clear title that has been washed clean.
Title washing is a sad thing that should not happen to good people. If a buyer is smart, he will do an AutoCheck or CarFax VIN check, which tracks a car’s history even if the title has been washed. Once a vehicle has been branded as flood damaged or salvaged, the information is reported to AutoCheck and remains in the vehicles history. The title may not indicate salvage, but a vehicle history report will have this record.
Scammers will also file deceptive paperwork to acquire a duplicate title, which does not show a lien. Owners are completely unaware of the lien until someone shows up to repossess the car.
Title washing is illegal, and consumers who came across this scam are to protect their rights and to claim compensation. The best way to do it is to apply to qualified dealer fraud attorney.