So where exactly are these cars going? Some end up dismantled in chop shops, while a good number of them are exported out of the country. However, some are hiding in plain sight, maybe even in the next lane.

These vehicles parading in broad daylight may be the product of a vehicle identification number (VIN) switching scam. VIN switching is when the unique VIN plate on a stolen vehicle is removed and replaced with a counterfeit VIN. Another tactic used is vehicle cloning, which is when a VIN is copied from an existing vehicle or a VIN is obtained from a salvaged vehicle. These stolen vehicles re-enter the vehicle population and, to the untrained eye, they often look like legitimate vehicles.

In 2009, the National Insurance Crime Bureau (NICB) recovered more than $2.7 million in VIN- switched vehicles, almost a million dollars more than was recovered in 2008. VIN switching is not a new problem. The phenomenon has been around for decades and was first detected on a larger scale in the late 1990s and early 2000s. However, a lot has changed since then.

When VIN switching first began, it mostly involved VINs being removed from salvaged vehicles and attached to stolen vehicles. To complete the scam, thieves engaged in title washing, which is the practice of re-titling a vehicle in a state that does not recognize salvage or junk title brandings so as to obtain a “clean” title. This clean title hides the fact that the VIN was previously “branded” as a salvage or junk vehicle, clearing the way for a thief to then sell the stolen VIN-switched vehicle at a higher value.

Today, however, thanks to affordable technology, thieves are more likely to just make up a VIN and fabricate matching counterfeit documentation. They have become more sophisticated in every way, from how they steal vehicles, to the methods of switching the VINs, and how to safeguard the vehicles (and themselves) from being discovered.

The Initial Theft

One noticeable change in VIN switching over the years is the nature of the cars being targeted. When VIN switching first became popular in the 90s, thieves sought out mostly high-end SUVs such as Cadillac Escalades and Lincoln Navigators, along with pickup trucks and other luxury vehicles. While these vehicles are certainly still the most popular, car thieves have expanded their attention to cars of all makes and models. These days almost nothing is off limits. It is not uncommon to see a mid-level sedan, a small two-door coupe, or even a soccer mom's beloved minivan fall victim to VIN switching.

Some of this change may be attributed to the ability of these vehicles to fly under the radar. Law enforcement and other professionals have been trained to look a little closer at SUVs and luxury sedans, so it can be harder to get these vehicles through the system or keep them from being recovered. Also, targeting these lower-end vehicles allows a car thief to make a quick buck. The market for these types of cars is much larger than the luxury market, meaning a thief can steal a car, switch the VIN, and sell it to an innocent purchaser sometimes within days. What they lose in sale price is made up in volume.

The methods of stealing vehicles have also changed in recent years. As the anti-theft systems in vehicles became more sophisticated, the thieves had to become smarter. Stealing a car off the street isn't as easy as it used to be. So how do thieves defeat the newest, most advanced anti-theft systems? By not fighting them at all. Alarms, microchips, and transponder systems are rendered useless when the thief has the right key.

Car thieves have found several ways to obtain vehicle keys. Some steal keys at valet stands, car rental places, or during a test drive. Lately, they just walk into a dealership with fake registration papers and have one made on the spot. Then all thieves need to do is find the car and drive off, making easy targets out of high-end vehicles that seem theft proof. Increasingly, members of organized theft groups use fake identification to lease a vehicle from a dealership. By the time the first payment is due or the identity theft victim realizes what has happened, the thief — and the car — are long gone.

Learn About the VIN Switch Process

Once the thief has a car, the VIN switching can begin. The VIN identifying the stolen car must be removed and replaced with the new counterfeit or cloned VIN. Every vehicle has its VIN in several locations, the most well known being the VIN plate on the dashboard and federal certification label on the door frame. When VIN switching began, it was common to see only the VIN in these two locations being altered or replaced. But now, the thieves have figured out many of the hidden VIN locations.

“Increasingly all 10 or 20-plus hidden VIN locations need to be examined to find they only missed one,” notes NICB Senior Special Agent Tommy Reed. “Advanced thieves will even go so far as to grind out the stolen VIN and re-stamp the counterfeit VIN over it, making detecting the car's true identity difficult even for an expert.”

Advances in the technology of home printers and computer software have also aided the VIN switching rings. Whereas counterfeit stickers and titles used to be fairly obvious because of misspellings, uneven text, and poor quality they are now almost exact replicas and to anyone other than an expert, they appear genuine.

Not only are the thieves doing a better job, they're also doing it faster. Months used to pass between the theft of a vehicle and its reappearance registered and titled with a counterfeit VIN. Now, it can only be a matter of days before a stolen car is first registered with its counterfeit VIN. A lot of these vehicles also travel great distances, going from New York to Florida or Florida to California within a few days of the theft. These cases highlight the extensive networks the thieves have in place. Some have even used counterfeit or altered documents to register a counterfeit VIN before a vehicle to put it on has even been stolen.

While the sophistication in VIN switching has notably increased in recent years there still seems to be two levels of thieves at work. The truly professional thieves can do such a good job of changing the VINs and counterfeiting documents that even seasoned investigators will have a hard time telling the difference. Conversely, some thieves have figured out that they don't need to put forth a high level of effort to get the job done. Most states don't require vehicle inspections prior to titling or obtaining insurance. Since the majority of the public doesn't know what to look for, a thief can sell a VIN-switched vehicle in a private sale without anyone even looking at the VIN plate or stickers. Several of NICB's vehicle investigators say about half of the VIN switching jobs they see are professional jobs and the other half are very poorly done.

How We Are Fighting Back

According to the Federal Highway Administration (FHA), in 2008, there were more than 248 million motor vehicles registered in the United States with 135 million of these privately owned automobiles. Finding the VIN-switched vehicles among the legitimate vehicles is like searching for a needle in a haystack. The NICB, however, is taking on this formidable task. The NICB has developed data-sharing agreements with several companies and agencies to analyze their vehicle data to proactively identify VIN-switched vehicles and recover them. In total, these projects have led to the recovery of $6.5 million in VIN-switched vehicles. These initiatives benefit not only insurers, but the public as well.

Identifying these vehicles and recovering them, however, are very different tasks. While $6.5 million has been recovered, there is approximately $4.7 million more in VIN-switched vehicles that have been identified but not located. Over the years, the thieves have learned how to safeguard these vehicles from being recovered. Oftentimes, the vehicles are registered under a fictitious name and address, which makes locating these vehicles nearly impossible. If the name or address is good, then it commonly turns out that the residents have never heard of that person or seen that vehicle, or in some instances were paid by someone to register the vehicle. It can take years for some of these vehicles to be recovered, if they are recovered at all. Sadly, it's usually not until a vehicle has been involved in an accident, stopped by an astute officer for a traffic violation, or sold to an unsuspecting buyer that the truth surfaces. If a vehicle was purchased by an unsuspecting buyer, then the person is left without a car and oftentimes without the means to immediately replace it. Further confusing the issue is that when some vehicles are finally located, it is several states away from where they are actually registered.

So what could help prevent or deter the VIN switching problem? Simply put, communication. As it stands now, most states do not communicate with each other regarding vehicle registration information, which is what allows these thieves to register the same VIN in more than one state or use a counterfeit title to obtain a legitimate one. If California was able to verify with New York that the New York title being presented was valid or check nationwide to make sure the VIN is not already registered in another state, then the thieves would have a harder time getting these vehicles into the system.

The National Motor Vehicle Title Information System (NMVTIS) was set up to do just that by compiling Department of Motor Vehicles' (DMV) data for all states in one place and requiring states to do title verification checks before issuing new titles. Presently 22 states are fully participating in the program; 12 states are providing data only; 15 are in development; and two states, including the District of Columbia, are not participating. Once NMVTIS has all 50 states both providing data and making inquiries, it should greatly hamper the ability of VIN switching thieves to register these vehicles.

VIN switching is an insidious part of the vehicle theft problem, and as the thieves become more sophisticated, the vehicles are becoming even harder to identify. This is especially troublesome for the average used car consumer. Several services offer vehicle history reports which can be helpful to avoid buying a car that has been in an accident but they rarely contain information that would alert a consumer to a potential VIN-switched vehicle. When buying a used vehicle from a private seller, it really is “buyer beware” because even though the vehicle theft rate has been dropping, the professional thieves are still hard at work hiding stolen vehicles in plain sight, maybe even in your own garage.