ASKED & ANSWERED: Bill Schuette on flood-damaged cars

By Steve Thorpe Legal News Michigan Attorney General Bill Schuette recently issued a consumer alert advising Michigan residents to exercise caution before purchasing their next used car to avoid being scammed into purchasing a flood-damaged vehicle. The warning is a response to an influx of flood-damaged vehicles on the national automotive market in the wake of Superstorm Sandy's devastation on the east coast. Thorpe: How many vehicles do you estimate may have entered the market after being damaged by Hurricane Sandy? Schuette: The National Salvage Vehicle Reporting Program has already identified 80,000 flooded vehicles that have been listed for sale at salvage auctions. The program has identified cases where flooded vehicles are sold, and then later re-sold at auction under a clean title without reference to the flood damage. Oftentimes, the re-selling occurs across state lines, in order to avoid detection by authorities. Since insurance companies have already recorded more than 230,000 claims for flooded vehicles since Sandy, tens of thousands of vehicles may be entering the market nationally. Thorpe: How might floodwaters damage a vehicle? Schuette: Contaminants from floodwater will cause premature wear and damage to the engine, transmission and other components of the drive train. The vehicle's computer and electrical systems are also vulnerable, causing anti-lock brakes, airbag systems and electrical components to malfunction or fail. Much of this damage can be difficult to discern with the naked eye; that is why we recommend consumers have vehicles inspected by a mechanic who is not affiliated with the seller. Thorpe: How does a consumer research a vehicle's history to look there for damage information? Schuette: Consumers can check a vehicle's history by accessing the National Motor Vehicle Title Information System website and entering the Vehicle Identification Number. The cost for a report ranges from $3 to $13. Check to see if the title has been branded as "flood," "salvage," "rebuilt," or has another brand indicating the vehicle was severely damaged. A vehicle history should also tell you if the car was ever in a flood region. However, it is important for consumers to be aware that a clean title does not prove the car is undamaged. The title may have been laundered across state lines or altered to conceal the brand. Thorpe: When viewing a vehicle in person, what signs should a consumer look for that might indicate flood damage? Schuette: Flood damage can be very difficult to spot. Unlike collision damage, once the vehicle has been washed or detailed, flood damage often does not show any physical deformity and is easily disguised. Further, damage may be progressive and only appear over time. Some signs that consumers may look for include: * Musty or "over-perfumed" smell or signs of mold or mildew. In particular, the jute padding underneath the interior carpet can mold and smell moldy, especially and more noticeably as the weather becomes warmer. * Mud, rust, and grime in hard to reach places where water would not normally reach or would be difficult to clean, like under the seats and carpeting, in the trunk, glove compartment, dashboard underside, inner doors, and inside the engine area. Pull back the carpet at different areas and look for mud, dirt or signs of water stains. Open all doors, trunk and hood to inspect for corrosion, mud and dirt or discoloration on door frames, hinges and under the weather stripping. * Visible water lines on the vehicle. * Faded upholstery or upholstery that does not match the rest of the vehicle. * Seatbelt discoloration. * Drainage holes beneath the car (drilled to drain floodwater). * Premature rusting and metal flaking. * Electronic component failures: power windows, doors, mirrors, warning lights, and exterior lights that do not turn on. * Wires that crack when you flex them because they were wet and became brittle upon drying. However, instead of relying upon solely your own inspection, it's recommended that you have an independent mechanic inspect the vehicle. Trained mechanics will be more likely to spot damage, especially if efforts have been made to conceal it to the naked eye. Thorpe: What should a Michigan consumer do if they believe they've been sold a flood damaged vehicle that wasn't properly represented as such? Schuette: If the purchase was from a used car dealer, the consumer should file a complaint with the Secretary of State, Information Security, Regulatory Monitoring Division by calling toll-free, 1-888-767-6424. If the purchase was from an individual or online, the consumer may file a complaint with the Attorney General's Consumer Protection Division online at www.michigan.gov/ag. Consumers may also wish to consult with a private attorney with expertise on motor vehicle sales for legal advice on possible recovery of damages. Published: Tue, Mar 12, 2013

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