Don’t trust the clean title you are holding in your hands when looking at your next used car. Scam artists are using title washing to get clean documents. This is a huge scam that affects almost a million vehicles nationwide and it could be haunting your next car.

We found out earlier about the couple that thought they bought a clean car that ended up being branded a “Total Loss” after the fact. This is all too common and very easy for scam artists to accomplish due to inconsistent laws between states. In most cases, sellers juggle cars between states that have looser title laws or ones that do not have a brand for certain damage at all.

Texas is one of the biggest states where cars go to be title washed and it’s usually done through something called a mechanic’s lien. A mechanic’s lien allows a shop to recover charges for repairs completed on a vehicle if they are not paid within a month of being completed. In legitimate cases, this allows shops to recover costs if a vehicle is abandoned once repairs have been completed.

The way the scam artists use this law is by working with an existing shop in the state or by setting up their own fake shop. Once they have the paperwork for the shop they show the out of state salvage cars as being “repaired” in that shop. Once they have paperwork to show a month has passed they show that the “repairs” have not been paid and apply for a mechanic’s lien. If the paperwork is in order, the lien is granted. Since they do not have the original title, they fill out a packet of paperwork and turn it in to get a new title to be able to sell the car. The title they receive is a clean Texas title, which they are able to show with the car and sell it as clean.

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There are many states where similar loopholes exist or where title branding is not consistent. Title washing is only one portion of the problem as many times the vehicles are missed or not branded in time before going to the auction block. I pulled up Copart today and searched for clean titled vehicles and this Jaguar caught my eye as it quite visibly destroyed but the title field states it has a standard clean Texas certificate of title. This specific vehicle might not be worth the time of a scam artist but there are many more that do get repaired and sold as clean.

The problem lies in the fact that each reporting agency only has a certain portion of vehicles and the data is not shared in many cases and if you have a small local insurance company they may not report the damage at all or may not report it in a timely basis and you may be stuck with a salvage car and not even know it. The best ways to combat this are to use all of the vehicle history services available and have your vehicle checked by trusted mechanic before making the purchase.

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[Photo Credit: Flickr, Copart]

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