Pub. 1 2018-2019 |Issue 1

29 In media coverage for these storms there weremany pictures of the devastation. The pictures often showed buses, cars, and trucks that had been submerged, completely or partially, by the water. Some experts have estimated that in the southeast part of the country alone therewere asmany as 500,000 vehicles that had been damaged by the floods. You knowwhat happens during the cleanup: the vehicles are totaled and removed. You also knowwhat else is going to happen: many of those damaged vehicles are now, or will be soon, put on the used car market. Many news stories have already warned people about buying these cars, but it isn’t really the dealerships they should be worried about. It’s the peoplewho sell cars privately and then disappear, and especially the peoplewho sell damaged vehicles to dealers without disclosing the fact that the cars being bought were damaged as a result of natural disasters. Dealers, just like other people, are sometimes victimized by peoplewho are out to scam them. That makes it especially important for dealers to be careful when they buy a used vehicle and get it ready to sell on the retail market. Inmost states, the laws require that flood damage be disclosed to the buyer. Virginia lawoffers just one example of this. If someone spends as little as $3,500 on flood damage, and thework is paid for by an insurance company, then someone has to create a signed statement disclosing that fact and attach it to the title. The new title then includes the information from that point on. But some states do not have brands on titles, and it is possible to temporarily titlemany totaled vehicles in states that don’t provide for brands. In other words, it is possible to “wash” titles. Most dealers probably already know that they cannot assume that vehicle history reports will always tell themabout any problems a vehiclemight have. Repairs can be reported in away so that the vehicle history report servicewill not pick themup. Also, even if the report ismade correctly, it could takemonths before the repairs and actions by the insurance company are actually added. Sometimes a dealer will buy a car that was damaged in a flood, see no information about it being totaled on a vehicle history report, and then have a buyer come back later once the history actually does appear. The buyer, naturally enough, thinks the dealership is guilty of fraud and that it has violated the state consumer protection act; hiring a lawyer to sue the dealership is the understandable next step, even though the fact is that the dealership intended no harmwhatsoever. Therewas a fraud, certainly, but the dealer wasn’t the onewho committed it. What can you do as a dealer to protect yourself? You can do thorough inspections before buying vehicles to retail. Look for evidence of flood damage or any other kind of significant damage that might have been repaired. Here are some suggestions of what towatch for: • Check the warranty history for relatively new vehicles that your dealership sells. Do you see any evidence that the vehicle was ever in Alabama, Louisiana, or Mississippi? • If the state title history is available electronically, run a vehicle history report. At the very least, youwant to knowabout the problems that have been reported. • Is there any driedmud or grit? In particular, look at and around the small recesses of the dashboard, the glove compartment, the power steering pump, relays, in or under the seats, the starter motor, and the trunk. • Is it possible the rugs or seats have been replaced? The upholstery colors, carpet, and interior should all match if they are original. If they are not, you have a problem. On the seats, you can also look for rusted components, includingmounting bolts, screws, and other hardware. On the rugs, check for discolorations or stains. Don’t forget to look at the carpet in the trunk. • Look for evidence of rust and flaking. Check the undercarriage, inside the vehicle, and under the carpets. Is what you see consistent with the car’s age? • Look for awaterline on the undercarriage, the outside of the ending, and onmoldings and kickplates. • Sometimes flooding can damage the electrical wiring system. Check the instruments tomake sure they work correctly and do a detailed inspection of the entire system. • Look in the console and other areas that would normally be dry. Do you see rust on any of the screws? • Does the vehicle smell damp or musty? To protect the dealership, you should also talk with the people in the used car department and warn them to be alert. People who wash the titles of damaged vehicles are not going to hesitate before also trying to trick dealership managers into buying these vehicles. This is a good time for everyone to be extra careful even if the employees at your dealership are experienced and knowledgeable. 3