I bought it to flip and make a few dollars.

Consumer Warnings
After Hurricanes Rita and Katrina, thousands of water-damaged vehicles are appearing on the used car market. Titles that have been transferred from state to state may lose any indication that the vehicle was ever declared salvage.

Protect yourself from buying a salvage vehicle that wasn't properly repaired. Be wary of a vehicle with an out-of-state title or one where the seller's name is not the one on the title.

Also check for water damage, moldy smells, discolored carpet, and other signs that the vehicle may have been submerged.

You may also want to avail yourself of one of the many title investigation services. These title search companies will, for a small fee, check all instances of the vehicle's VIN number on titles in every state. Even your dealer may honestly not know that he or she is selling a vehicle with a title that has been "cleaned" of the salvage designation.

Titles washed away.

17 states do not record the "salvaged vehicle" title designations for out-of-state cars and trucks.

Arizona Maine New York
Arkansas Michigan North Dakota
California Minnesota* Ohio
Illinois Mississippi Rhode Island
Indiana Missouri Texas
Kentucky New Jersey Vermont
* Minnesota does not carry forward "salvaged vehicle" designations for cars and trucks that are more than 5 years old

Title-washing

Insurers & the Rebuilt Wrecks Scam
ConsumerAffairs.com / Sept 25, 2006

Not long ago, the Senior Counsel for the Consumer Federation of America (CFA) testified before a U.S. House of Representatives subcommittee about the problem of wrecked and storm-damaged cars being rebuilt and sold as "certified" used cars.

"Each year, millions of severely damaged vehicles are not destroyed, but rather are sent by unprincipled insurers to auto auctions where they are sold to unscrupulous auto dealers and rebuilders," CFA's attorney Rachel Weintraub told the House subcommittee. "Unscrupulous insurers, auto dealers, auto auctions, and rebuilders pocket billions in ill-gotten gains from the fraudulent sales of prior damaged autos -- at the public's expense."

Weintraub said the scam works this way:

• A consumer wrecks a vehicle -- or it's damaged in a flood or other catastrophic event. The insurance company totals the vehicle, and pays the claim. The insurance company may or may not brand the title as "salvage." A salvage title reduces the vehicle's value by 50 percent;

• The insurance company sells the vehicle to a salvage auction. The auction gives the insurance company part of the profits from the vehicle's sale. A 2002 Consumer Reports investigation estimated that insurance companies recovered $2.5 billion a year from the salvage sales of wrecked vehicles;

• An unscrupulous rebuilder buys the wrecked vehicle and makes cosmetic repairs to conceal signs of previous damage. Rebuilders typically don't have the expertise to repair wrecked vehicles, are often unlicensed by the states, and sometimes are based in Mexico and other countries Another dangerous ruse? Rebuilders often disable the airbag systems or fail to replace the deployed ones. Air bags are expensive to replace; one airbag for a luxury car may cost as much as $2,000. Multiply that by six and the price tag quickly adds up.

• Rebuilders sell the wrecked vehicle to another auction, a dealer, or a curbstoner. Those are people who make repairs in their own shops or backyards, and then sell directly to consumers. If the title was branded as salvage, rebuilders try to erase all signs that the vehicle was damaged. That's called "washing" a title. Rebuilders wash the titles by sending them to states that don't recognize the salvage brands. They also use the correction fluid, Wite-Out, to conceal the vehicle's history or make a counterfeit title. "There is a large incentive to commit fraud," Weintraub testified. "A vehicle with a clean title can command a far higher price than one with a branded title."

• Rebuilders often advertise these damaged vehicles as "certified" used cars in mint condition. If consumers ask about the car's history, they're told the title is clean. Consumers can't confirm that information because they usually don't see the title before the sale. If they get a loan, for example, the lien holder gets the title.

Weintraub told House members this scam threatens the safety of hundreds of thousands of unsuspecting consumers nationwide.

"Consumers may unwittingly purchase a car that superficially appears in good working order, but has been previously severely damaged by serious collision or flood damage," she testified.

No one knows for sure how many rebuilt wrecks are on the market, but the Consumer Reports investigation estimated the industry "beats, bends, and bangs out as many as 400,000" annually that are five or less model-years old. And many consumer experts say that number is likely much higher.

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