Pre-owned car buyers: Know about flood damage
Flood-damaged vehicles often resurface in areas across the country following the hurricane season. “We’ve had quite a bit of rain and flooding, so it will be worse than usual this year,” said Philip Reed, senior consumer advice editor for automotive research site Edmunds.com. “It’s a danger for car buyers.”
- The danger is that once a damaged car goes to the salvage yard, an unscrupulous dealer might refurbish and resell it, often to an unsuspecting buyer in another state, he said. By moving the car to a different state and having it change hands multiple times, a dealer can erase any record of damage, a practice called “title washing.”
- Private sellers may also try selling their vehicle, without disclosing the damage to the buyer.
Because the waterlogged cars must be given time to dry, they’ll typically surface a month or so after a flood or hurricance. In a recent advisory, Edmunds.com cautioned buyers in all states to be on the lookout for signs of water damage in vehicles, including musty odors, discolored carpeting, fogged-up headlamps, rust in the undercarriage, and dirt in unusual places.
“Basically, you don’t want this car,” Reed said. “It might be working properly now, but the problems could show up later.”
In particular, flooding, such as Superstorm Sandy that hit the Jersey Shore so hard— especially with levels high enough to fill the engine compartment — can damage a car’s electrical and safety systems, causing airbags and antilock brakes to malfunction and effectively turning the car into “a ticking time bomb,” according to vehicle history provider Carfax.
Carfax estimates the number of damaged cars that make it back into the marketplace could reach the tens of thousands, especially since the recent flooding affected such a densely-populated region.
Of the 600,000 cars damaged by the 2005 hurricane season — which included Katrina, Wilma and Rita — half of them resurfaced on the market, the company said. While some of them were sold with full disclosure, often the buyer had no idea about a car’s soggy history, said Chris Basso, a spokesman for Carfax.
- Another ploy to watch out for, Basso said, is repair shops that use parts from damaged cars to fix vehicles. Even six years after Hurricane Katrina, some water-damaged parts are still floating around the market, he said.
Generally, consumers in non-flood states are particularly susceptible to scams because they don’t think to look for water damage. Consumers can avoid this, in part, by ordering a vehicle history report from Carfax, which keeps all records of any damage reported to states, police and insurance companies, he said. Carfax also offers a free flood damage check on its website.
But because car records are limited to what has been disclosed, prospective buyers should also take extra precautions, such as taking the car for a test drive and getting it inspected by a mechanic, he said.
“People are looking to make off with your money and leave you with a car that’s rotting from the inside out,” he said. “Diligence is key.”
In New Jersey, failing to disclose past damage to a vehicle is subject to a penalty of up to $10,000 for the first incident, under the Consumer Fraud Act. In the last two years, the state Division of Consumer Affairs said it has reached settlements totaling $240,000 with five used-car dealers accused of withholding information about damage.
“You can kick the tires, open the hood, check the body for rust but, unless you are told, you can never see that the car or truck you want to buy was severely damaged and subsequently repaired,” said Thomas R. Calcagni, director of the division.
The New Jersey Coalition of Automotive Retailers encouraged prospective buyers to shop only at reputable dealerships with a physical business location, and be wary of deals that appear to be better than what everyone else is offering.
“If it’s too good to be true, it probably is,” said Jim Appleton, president of the group, which represents 515 franchised dealers across the state.
In the long run, however, what the industry needs is a national records database, so that cars branded for salvage, fire, theft and collision damage in one state cannot resurface in another state with a clean record, he said.
Until then, crooked dealers will continue taking advantage of the “patchwork” of state regulations.
“As sure as the sun comes out after the rainfall, there will be unscrupulous people who will take flood-damaged vehicles and try to pass them off as quality vehicles,” Appleton said. “It’s tough for consumers to protect themselves from that.”
If you're suspicious about whether a car you're considering has indeed been in a flood, you can buy a vehicle history from services such as CarFax.com. There's also the free National Motor Vehicle Title Information System and VINCheck from the National Insurance Crime Bureau.
Keep in mind that the car's title will show that it's been in a flood only if it was officially totaled by an auto insurance company.
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The above article was published online Tuesday, September 13, 2011, 7:30 AM on NJ.com
