What is Car Title Fraud?

car title fraud

Before starting to explore crafty world of vehicle title fraud, we should define what the car title is.

Car Title

State department of motor vehicles issues a legal document describing car by make and vehicle identification number (VIN) as well as lists its legal owners. This document is called a car title.

The Basics of Car Title Fraud

When car title is modified in a way distorting the actual condition of the vehicle we have fraud. Title fraud has two varieties. The one is the most evident and a bit trite. Remember any B-Movie or 1970’s cop show where vehicle thieves and fishy used car dealers were pulling the cars into a huge Quonset, mincing, hewing and changing the VIN numbers and then printing up a stack of false car titles to sell them for a significant profit. Nowadays this activity is still alive. To protect against car title fraud the states add watermarks and micro-printing to the title documents.

To avoid car title fraud always double check the edges of the document where the printing must be pointed and hold it up to the light to see whether it has watermarks. This kind of car dealer fraud is equal to currency falsification In most states it is classified as a class two or three felony. Dealers or individuals alleged of car title fraud can be sentenced to 5-10 years in a correctional institution.

Title Washing

Vehicle titles can be altered in another way, which is perfectly legal. The title may be modified not because the car has been stolen or but altered for a simple purpose: money. Modifications to this legal document are done to get rid of salvage brand. A vehicle with salvage title is sold at the cheapest price whereas the same vehicle with a clean title can bring a big profit.

When the vehicle is damaged to the extent that expenses on its repairs prevail over its actual value it is branded as salvage. The damage may be result of fire, submergence or collision, which means that the car is no longer roadworthy. In general a salvage title should be pasted forever but scammers «wash» titles to remove the brand.

Salvage title is not recognized in every state the same way. Shady folks are known for obtaining salvaged cars from one state, making minor repairs and driving it to another state where it gets a new title free of salvage brand.

For instance, if the salvaged car is transported from Ohio to New York, sold there and then transferred to Pennsylvania, with the lapse of times it finds a new owner in Wisconsin, and its title won’t demonstrate any signs of salvage. Legally, all the damages the vehicle may have are hidden under the new titles, whereas it may be a hazard. This practice does happen, but consumers don`t know the truths.

Title washing scam was made possible due to auction houses, wholesalers and used car dealers as they are dealing with large volumes of cars travelling along the U.S. Major disasters such as hurricanes Katrina and Sandy leave thousands of vehicles under water for days and even weeks. Insurance companies pay off these flood-damaged cars and a plethora of vehicles with damaged brakes, electronics and engines are flooding the market. These cars cost next to nothing, just a few hundred dollars, but the scammers buy them, make minor repairs and sell them for a few thousand dollars gaining huge profit.

Car title fraud will occur and reoccur until ways are found to permanently brand salvaged cars. If you have faced the title scam feel free to contact an attorney to protect your rights.