Consumer Lookout: Flooded cars floating to Minnesota

02/11/2007

Jackie Crosby
Star Tribune
Last update: February 11, 2007 – 12:18 AM


The troika of hurricanes Katrina, Rita and Wilma that tore through the Southeast in 2005 were a thousand miles or more from Minnesota. But the state is feeling the ripples as formerly waterlogged vehicles make their way north at a rising clip.

Between 2002 and 2006, Minnesota had an increase of 173 percent in the number of cars, trucks and vans with water damage, according to a new report from Carfax, a Virginia-based company that sells vehicle-history reports. The national average was 103 percent.

While Carfax didn't release exact numbers of flood-damaged cars, a spokesman said the database showed that in 2002, one in 800 searches in Minnesota came back flagged with a flood title. In 2006, the rate jumped to one in 300 searches.

"Flood-damaged cars are the worst cars you can buy," said Chris Basso of Carfax. "Flood damage affects the car's safety."

Water can damage wiring and destroy the car's central computer system. That can affect little things, such as power windows, but it also can shut down antilock brakes, airbags, even your transmission.

Then there's the issue of mold caused by polluted floodwater that seeped into the carpeting and upholstery.

It's not illegal to sell a car that's had flood damage, said consumer product attorney Todd Gadtke of Hauer Fargione in Minneapolis. But it's illegal if a seller knows about it and doesn't disclose it.

Specifically, Minnesota law requires a seller -- both private parties and dealers -- to tell you if the car has suffered damage of more than 70 percent of its value. The state is required by law to identify flood-damaged cars by "branding" the certificate of title. This applies to cars damaged in Minnesota or in other states.

Dealers must tell you orally if they know the vehicle has been damaged in a flood, and in writing if the car, truck or van got submerged while in the dealer's inventory.

Despite those protections, consumers still get duped into buying once-soaked cars.

That's because it's easy for crooks to "wash" titles of scrapped cars when vehicles cross state lines, said Frank Scafidi of the National Insurance Crime Bureau. Unethical buyers can get a damaged vehicle at auction for a low price, make inexpensive cosmetic fixes, clean the title and resell it.

"That's the worst-possible scenario," Scafidi said. "It's a cheap investment with a lot of potential for people to make an easy buck."

The problem is compounded by the lack of a national database that would allow state agencies to check vehicle identification numbers, or VINs.

Cost concerns have stalled previous efforts to establish a computerized network, but a measure set to be reintroduced by Sen. Trent Lott, R- Miss., could carry some water this year. Lott wants to force insurance companies to disclose details on cars that have been declared a total loss in a "reasonably accessible" electronic format.

"Total-loss disclosure is a no-brainer," said Joe Wiesenfelder of Cars.com in Chicago. "People shouldn't be able to move something around and have its history disappear."

The best advice is to arm yourself with as much information as possible. Be especially careful if you're buying from a private party.

Get a free flood-title report through the National Insurance Crime Bureau, Autochex or Carfax. But you also should purchase a full vehicle-history report, which costs $20 from Carfax and Autochex. The information isn't fool-proof; gaps in the timeline could indicate a title has been washed clean.

Be willing to pay another $40 to $60 to have a mechanic you trust check out the car.

"We might see rust on the bolt pads, or notice that things haven't necessarily been put back together correctly if someone's replaced the carpet," said Tony Carpenter, owner of Tisdel's Garage Service.

For added security, look for certified pre-owned cars offered through new-car dealerships that also sell used vehicles. Such vehicles come with a warranty, have been inspected and can be returned within a certain time frame.

Check the dealership's record with the Better Business Bureau and the Minnesota Department of Commerce.

Finally, ask directly whether the car has been damaged in a flood. If a seller out-and-out lies, you might be able to build a better case of consumer fraud.