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Title-Washing Scams Follow Katrina

September 6, 2005
Here's a different kind of storm warning: Look out for "title-washed" cars.

Salvage Titles • Suit Charges Feds Fail to Fight Title-Washing • Carfax Reports Record Amounts of Title "Washing" • Congress Treads Water on "Flood Car" Bill • States Need Help Fighting Used Car Fraud • Title-Washing Scams Follow Katrina • Pennsylvania Suit Challenges State Farm Salvage Title Deal • State Farm's Wrecked Car Owners Feeling Slighted • State Farm Pays $40 Million to Settle "Branded" Car Title Issue • California Bill Would Expose Totaled Vehicles

Hurricane Katrina has damaged 250,000 to 500,000 vehicles in Louisiana, Mississippi and Alabama, according to industry estimates. That damage includes new and used vehicles on dealership lots, as well as cars and trucks owned by individuals and companies, according to Carfax, which compiles vehicle history reports.

A vehicle's title should reflect whether the vehicle has sustained flood damage or has been salvaged. But automobile industry executives warn that that scam artists may try to return damaged vehicles to the market by "washing" their titles.

”Washing” a title conceals a salvage vehicle's history of damage by moving the vehicle and title through several states. Some states do not pick up from other states the title branding that would show salvage or flood damage.

The title washing problem could become especially acute in the Southeast as consumers and dealers seek to replace vehicles that were damaged or destroyed by Katrina.

Buying cars online through e-Bay or other auction sites and from individuals or second-tier user car lots will be dangerous for months to come. As titles are scrubbed, the affected vehicles will be scattered throughout the country.

User car buyers should use extreme caution, buying only from reputable dealers and getting a title guarantee from the dealer in writing.

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