Legislative action is being floated in Congress that would keep hurricane-damaged automobiles with phony titles from being sold to potential buyers, according to a House Energy and Commerce Subcommittee report.
Title fraud occurs by altering or duplicating the title of a flood-damaged or totaled car to give it a clean title history. The scale of Hurricanes Katrina and Rita highlighted the title fraud problem, with some estimating that more than 600,000 vehicles may have been damaged.
The flood-damaged vehicles being sold across the country as used cars have been cosmetically altered to appear almost new, according to the Automotive Service Association, an organization that represents the mechanical and collision repair segments of the industry. Although the salt water damage may not be visible, the inner workings of the vehicle are typically beyond repair. Instead of being destroyed, some of these damaged vehicles are being sold to wholesalers nationwide and then to unsuspecting consumers who unknowingly put themselves at risk.
“Most of those vehicles were damaged beyond usefulness,” said Rep. Joe Barton (R-Texas), referring to the automobiles affected by Katrina, Rita, and Wilma. “But it seems inevitable that a few bad actors will seek to spread the misery of the hurricane by shining these vehicles up and selling them to gullible buyers in states far from the Gulf of Mexico.”
Congress established a program called the National Motor Vehicle Title Information System in 1992 to combat the problem by linking departments of motor vehicles, but it has not been fully implemented. Several of the witnesses at the subcommittee hearing argued that the program needs additional funding in order to create a nationwide database, with some even proposing involvement from the private sector in order to speed up the process.
The National Insurance Crime Bureau, a nonprofit organization supported by major property/casualty insurers such as Allstate and State Farm, already allows users to check vehicle and hull identification numbers on its web site (www.nicb.org) to determine if a specific vehicle was involved in a hurricane from last season. It collects the information not only from insurance companies, but also from salvage yards and state and local authorities. However, it is unable to get information from the Department of Motor Vehicles.
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