Tennessee Motor Vehicle Commission: Beware Flood-Related Vehicle Scams

Tuesday, September 19, 2017 | 1:32pm

NASHVILLE – Consumers who are shopping for a new vehicle should be aware that flood-damaged cars and trucks from states ravaged by Hurricanes Harvey and Irma will eventually surface in Tennessee. In an effort to raise awareness, the Tennessee Motor Vehicle Commission, which is part of the Department of Commerce & Insurance’s Regulatory Boards division, is warning consumers to be alert for scammers who might disguise severely water-damaged vehicles as being perfectly good.

“The recent disasters in Texas and Florida are expected to leave over a million flood-damaged vehicles in their wake,” said Motor Vehicle Commission Executive Director Paula Shaw. “We want to help Tennesseans avoid unknowingly purchasing a used car that may have received non-repairable damage. Driving a flooded car puts its owner and other drivers at risk of injury or death.”

The Motor Vehicle Anti-Theft Act of 1996 makes a clear distinction between a “fresh water flood” vehicle (which can be rebuilt) and a “saltwater damaged” vehicle (which cannot be rebuilt). Tennessee titling laws, governed by the Tennessee Department of Revenue, distinguish between “non-repairable” and “salvage” vehicles by the type and extent of the damage. The determination about the type and extent of damage is made by the insurance company.

Many of the vehicles damaged as a result of hurricanes Harvey and Irma will be categorized as salt water damage due to the presence of “brackish water,” a mixture of salt and fresh water that is generally the result of the backwash of saltwater into bayou areas. Saltwater damage continues to corrode and eat away at a vehicle’s body and operating components, even after it is cleaned up and repaired. With the computer system of today’s motor vehicles commonly located in the lower quadrant of the car, even low water levels of water damage can cause damage to a vehicle’s electrical system.

A vehicle that has been declared a total loss due to saltwater damage is deemed “nonrepairable” and may never be titled again in the state of Tennessee. Saltwater damage vehicles can only be dismantled and used for parts.

Unscrupulous individuals looking to take advantage of the fact that no national standard or definition of various title brands exists and move water-damaged vehicles to states with different laws or definitions, giving them a “clean title” in that state. Typically, there is always an influx of water or saltwater damaged vehicles on parking lots and social media sites following an occurrence such as a hurricane or flood.

Scammers typically attempt to sell flooded vehicles quickly after a disaster, hoping to stay ahead of computer system updates so that title check systems don’t have time to detect the car’s history. By the time a consumer discovers the vehicle’s history, the seller will be long gone.

To help consumers avoid these flood-related car scams, the Tennessee Motor Vehicle Commission provides the following guidelines:

  • Any person selling a flood vehicle is required by law prior to the sale of the vehicle to disclose such to the purchaser. Further, once titling that vehicle, the purchaser will receive a branded vehicle title indicating the vehicle’s salvage history. Having such a title will substantially impact the value of that vehicle for further resale.
  • Anyone attempting to purchase a vehicle in the near future should be on the lookout for indicators of a flood vehicle, such as a musty smell, damp carpets, or mud/silt under the seats, and should attempt to find the vehicle history prior to purchasing.
  • Use a reputable title check service, such as the National Motor Vehicle Title Information System, to check the vehicle history. If you find that it was last titled in a flood-damaged area, you should ask a lot of questions before making a decision. Keep in mind that title check companies are only as good as the information that they collect from other sources. Some of the sources that they collect data from may be delayed in pushing their data to the system. 
  • Remember that a vehicle’s flood history may take up to 30 days or longer to post on traditional consumer reporting sites. As such, the Commission recommends that individuals purchase motor vehicles from a licensed motor vehicle dealer, which they can verify at https://verify.tn.gov
  • Because the vehicle could appear to be in very good shape, even if it has significant electrical and corrosion issues, it’s important to always have a trusted mechanic inspect a vehicle before purchasing it.
  • Be aware that there will be many recreational and powersport-type vehicles that have been damaged as a result of the recent storms as well. Look for the signs of flooding and saltwater damage before purchasing these units, too.
  • Keep in mind that there are lawful ways of reselling previously damaged vehicles. “Rebuilt vehicles” can be repaired and sold as long as they comply with the applicable laws. The Motor Vehicle Commission requires that licensed dealers provide a disclosure of the vehicle’s history on the Commission approved form.
  • “Saltwater damaged” vehicles are non-repairable but can be dismantled and the parts can be sold lawfully through a licensed dismantler/recycler.
  • If you suspect a licensed dealer* has sold you a vehicle with a salvage history and failed to disclose it, you may file a complaint here.
  • The Commission is not responsible for collecting or enforcing any refunds from unscrupulous sales but may take disciplinary action resulting in potential civil penalties or revocations of dealer licenses.

The Tennessee Motor Vehicle Commission is here to help consumers. Visit us online or by calling 615-741-2711.

*Please note that the Commission does not have authority over vehicle sales transactions between individuals. In those matters, consumers will need to contact their personal attorney for possible remedies.

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Commerce & Insurance