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Automobile Fraud: 2.3.6 Insurance Databases
A great deal of prior wreck damage will not be revealed by a summary title report, especially if the amount of damage fell below the threshold required for a salvage title. Insurance companies, however, keep detailed records of all claims, and pool this information in a database maintained by ISO (Insurance Services Office, Inc.).144
Automobile Fraud: 2.3.7 Other Quick Search Procedures
A number of services do not maintain databases, but instead contact the relevant DMVs about a vehicle after a request is made on that vehicle. These services can either provide a summary report or obtain the actual documents. Because they can provide detailed title histories, they are described in § 2.4, infra.
Automobile Fraud: 2.4.1 Introduction
The various titles and other documents evidencing a car’s history are often key to discovering exactly how a car’s history differs from that represented by the dealer. The detailed title history is often more revealing than the summary title history described in the prior section. Not only is there no substitute for obtaining copies of the actual records to determine if there have been alterations, forgeries, information left blank, and other problems, but the actual records will show the names and addresses of prior owners.
Automobile Fraud: 2.4.2.1 General
Each state has enacted a certificate of title act that requires that whenever someone purchases a car for use (as opposed to for resale), that purchaser must obtain a certificate of title or a certificate of registration in their own name. Those obtaining possession of vehicles with the intent to resell them do not have to obtain new titles in their own names, but may do so if they wish.
Automobile Fraud: 2.4.2.2 Information Found on the Title
The title will generally include the name of the jurisdiction and the phrase “certificate of title” at the top center of the form. Below that will be printed the vehicle identification number (VIN),152 the year and the make, model, and body type. Also listed will be the owner’s name and address, the lienholder’s name and address, a line for the lienholder’s release, odometer information at the time the title is issued, and any brands (such as salvage, rebuilt, duplicate title, lease, unknown odometer mileage, lemon buyback, prior taxi).
Automobile Fraud: 2.4.2.3 Powers of Attorney, Registrations, Title Applications, and Other Information Available Through a Title Search
State departments of motor vehicles (DMVs) file more than just titles for each vehicle. The state may also file registration documents, powers of attorney, applications for title, reassignment documents, affidavits of repossession, salvage certificates, emissions tests, odometer disclosure statements, and other documents.
Automobile Fraud: 2.4.2.4 How the DMV Stores Title Information
The state DMV retains information for all titles issued in that state and certain other documents as well. The DMV information is limited to titles issued in that state, but the DMV will have information on the prior state if the car was previously titled in another state, because the out-of-state title will have to be presented to obtain a new title.
The DMV usually maintains certificates of title under one or more of the following systems:
Automobile Fraud: 2.4.3 Electronic Titling
A number of states have converted portions of their titling systems to allow for the use of electronic format liens and/or titles. In 2019, in a long-awaited final rule, the National Highway Traffic Safety Administration (NHTSA) established federal standards for electronic titling and electronic title disclosures. The rules came in response to years of growing demands from Congress, the states, industry participants, and others for standards to allow the use of electronic titles and liens by the states.
Automobile Fraud: 2.4.4 How to Obtain Detailed Title Histories
Although the rules vary from state to state, most departments of motor vehicles (DMVs), for a fee, will provide documents concerning all title filings within the state for any vehicle.
Automobile Fraud: 2.4.5.1 Reviewing the Consumer’s Own Signature on the Old Title
The client obtained a new title for the subject vehicle after the car’s prior title was submitted to the department of motor vehicles (DMV). This old title may prove a critical piece of information for the investigation. One reason the old title is important is that the client’s own signature should be present on that title.
Automobile Fraud: 2.4.5.2 Names and Addresses of Prior Owners
Prior owners listed in the title history can provide critical information about the car’s history, especially concerning physical damage, mechanical defects, and mileage. While practitioners have reported varying success in contacting prior consumer owners, quite often consumers are only too willing to discuss their old cars and problems they had with those cars.
Automobile Fraud: 2.4.5.3 Odometer Discrepancies
A complete title history will include a large number of odometer readings and disclosures found on the titles, reassignment documents, powers of attorney, odometer statements, and other documents. Sometimes the numbers will be internally inconsistent or at least suspicious. For example, a reading at a later date that is lower than at an earlier date indicates a problem. Other times the increase in mileage over time is far less than predicted by normal use.
Automobile Fraud: 2.4.5.4.1 General
There are two key indicators to look for in a title search to identify salvage and similar wreck or flood vehicles. The first is a salvage title or title brand on a regular title indicating such a vehicle history, even if that brand only appears on an earlier title in the title chain. The other is the appearance of the name of an insurance company, body shop, or junk yard as a transferor of any title in the chain, or on a title’s assignment line, or in a reassignment document. In general, insurance companies will take ownership of such vehicles as part of an insurance claim settlement.
Automobile Fraud: 2.4.5.4.2 Understanding salvage brands
It is not always easy to identify an insurance company’s name on a title document, and it may be even more difficult to translate the salvage brand. One study found thirty different terms used by the various states to deal with salvage issues:
Automobile Fraud: 2.4.5.4.3 When salvage brand still on the new title
If the brand appears on the title the consumer retains, or on the title the consumer received from the dealer, then it is clear the dealer knew about the salvage history when it sold the car to the consumer. Investigate whether the dealer told the consumer about that history, whether the dealer made it difficult for the consumer to see the title, whether the brand was a meaningful word or a cryptic abbreviation, and whether the consumer should have noticed that brand on the title.
Automobile Fraud: 2.4.5.4.4 When salvage brand is removed from title
If a brand appeared on the title at one point, but is missing from subsequent titles, investigate how that happened. What parties are responsible for the change, and was the change legal?
Automobile Fraud: 2.4.5.4.5 When insurance company or body shop is a transferor but no title brand was applied for
Further investigation is warranted when an insurance company or body shop took ownership of the vehicle, but never applied for a salvage title which would contain the salvage brand. A number of states do not require notation on a car’s title that it has been totally wrecked.180 An insurer’s transfer of the car to such a state before seeking a salvage title should certainly be viewed skeptically.
Automobile Fraud: 2.4.5.4.6 When insurance company or body shop is not listed in salvage vehicle’s chain of title
Investigate when other evidence indicates that a vehicle was almost certainly salvage, but the name of an insurance company or body shop does not appear in the vehicle’s chain of title. Contacting prior consumer owners will usually pinpoint when the vehicle became salvage. Did the owner have insurance and what happened to the vehicle? If it was turned over to the insurance company or a junk yard, why does that establishment not appear in the chain of title? Such facts may indicate serious misconduct with a clear intent to defraud.181
Automobile Fraud: 2.4.5.5 Lemon Laundering
Examining a vehicle’s title history may help uncover lemon “laundering.” In almost half the states, the fact that a vehicle has been repurchased pursuant to a lemon statute must be branded on the title.186 Manufacturers can avoid this requirement by moving the lemon car to a state without a branding requirement or, at least in some states, by settling a buyback case prior to a final order, and then describing the vehicle as a voluntary or “goodwill” buyback not covered by the branding requirement.
Automobile Fraud: 2.4.5.6 Number of Prior Owners; Demonstrators; Lease or Rental Cars, Taxis, Police Cars, and Other Unusual Prior Owners
A title search will produce specific evidence of the number of prior owners. This information should be compared with the dealer’s representations. Similarly, the names of the prior owners can sometimes give a clue as to the prior use of the vehicle. When in doubt, these prior owners can be contacted to determine the nature of their business (for example, taxicab company or rental car company). Other uses such as a rideshare vehicle or a car for hire may be less detectable.
Automobile Fraud: 2.4.5.7 Duplicate Titles; Laundered Titles; Powers of Attorney
Duplicate titles and powers of attorney provide opportunities for fraud, and these should be viewed with caution. Compare duplicate titles with copies of the original title on file at the department of motor vehicles. Compare information on powers of attorney with the information the dealer puts on the title. Did the dealer have legal authority to use a power of attorney?187
Automobile Fraud: 2.5.1 Contacting the Prior Consumer Owners
Questioning prior consumer owners is an essential part of a car fraud investigation. Prior owners can speak directly to the car’s problem history before it was passed on to others who may have tried to hide that history: dealers, wholesalers, body shops, insurers, and manufacturers.
Automobile Fraud: 2.5.2.1 Records Dealers Are Required to Keep
The selling dealer will be a prime but reluctant source of information about the car sale.
Automobile Fraud: 2.5.2.2.1 General
The dealer will have a number of other documents pertaining to the vehicle and the sale. Car dealerships in general maintain many records, having documents for virtually everything that happens to a car from when it is purchased by the dealership until its eventual sale. This subsection summarizes various records likely to be kept by dealers and the information these records typically contain.