We usually have at any given time a number of cases on our firm’s docket in which our clients were sold previously-wrecked or salvaged vehicles after being told that the vehicles had never been wrecked or damaged.  In some cases, our clients were shown copies of Carfax reports.  We commonly see situations in which a vehicle had suffered prior damage not reported by Carfax.  Here is an interesting television news story about previously-wrecked and damaged cars and why you might not always be able to rely on vehicle history reports -

http://www.cbc.ca/marketplace/2009/vehicle_history_reports/main.html

We have handled a number of undisclosed damage / wreck cases recently.  These cases are not confined to any specific areas of Texas, though we tend to see more cases in the Dallas-Fort Worth and Houston areas (perhaps due simply to larger populations).

Generally, car dealers have told our clients that a car or truck had never been wrecked when the vehicles had prior damage and/or repairs.  We see situations in which car dealers purchase cars at auction, and are notified by the auction before purchase that the cars have frame damage or unibody damage.  This information at times appears on Carfax and/or Autocheck reports, and the timelines in those reports can assist in proving a car dealer’s knowledge of prior damage.  Under Texas law, a consumer might be able to recover diminished market value to the vehicle, cost of repairs, mental anguish, punitive damages, and attorneys’ fees.

Beware whenever a car dealer represents that a car or truck has never been wrecked.  Secure Carfax and Autocheck reports, and hire a mechanic or inspector to inspect the vehicle.

Related articles by Zemanta

• Carfax to offer recall info for GM customers (seattletimes.nwsource.com)
• VIN Hunter Pro Combines the Power of CARFAX, Black Book, and NADA on the iPhone (prweb.com)

We have seen a number of cases in which a dealer tells a consumer that a previously-wrecked vehicle has not been wrecked.  We have also seen situations in which a dealer tells a consumer that a car had experienced just minor damage from a prior wreck, when in fact the car had been “totalled” and had a salvage title.  However, there appear to be significantly fewer situations in which a dealer surreptitiously sells a “chopped car.”

A “chopped car” is a car that has been constructed by taking two badly damaged cars and joining them together.  This allows the dealer, or the “chop shop,” to take otherwise potentially near valueless vehicles and make a decent profit.  Stay away from chopped cars.  A chopped car is a “2-for-1″ deal that you can afford to pass up.

Photo Source: Wikipedia

What is “washing the title”  of a car or truck?  It is not a way to make a vehicle more saleable by giving it some type of special designation.  Instead, it is a way to hide salvage or other bad “brands” on a title.

When a car is wrecked so badly that it is declared a total loss by an insurance company, the title to the car might be designated, or “branded,” as salvage.  Very few consumers want to purchase a salvage vehicle.  Therefore, a dealer might attempt to “wash” the title to remove the brand.  The dealer might get the vehicle titled in a different state, hoping that the brand will not be on the new title.  The dealer might then use the non-branded out-of state title to obtain a new title in the dealer’s state.  The new title, if based on the out-of state title, might not have the salvage brand.

Be careful when purchasing a vehicle with an out-of-state title, or which appears to have been shipped to several states within a short period of time.  You might become the victim of a title-washing scam.

You purchase a car or truck from a car dealer.  The dealer tells you that that vehicle is in great shape.  It has never been wrecked.  You, like most people, are excited.  You can’t wait to show the car or truck to friends and family.  Your vehicle, whether new or new to you, looks great.  Then, things change.

You might take your vehicle to a mechanic for repairs, and he asks you about the prior wreck.  Or, your uncle Fred, a lifelong car buff, notes a discoloration in the paint on a portion of the car and asks when the car was wrecked.  Or, you begin to notice that a door on the truck does not close correctly.  You begin to believe that you have been defrauded.

Aside from the anger, shame, and mental anguish that arises, what are your economic damages?  You might need to pay to have certain things repaired as a result of the prior wreck.   However, even if the damage from the prior wreck has been fixed, your vehicle’s value might be less as a result of the wreck and repair.  This economic loss is known as “diminished value.”

You can probably perform some research on your own to get an idea as to the diminished value.  However, it is preferable to hire an expert.  Here are links to a few companies who purport be be experts on diminished value.  I don’t vouch for any of them.

http://www.autoloss.com/

http://www.collisionclaims.com/index.asp

http://www.mycarlostvalue.com/

There are a lot of rebuilt salvage vehicles on the road, and many people are unaware when they purchase a rebuilt wreck  Here is a good ABC News story on rebuilt salvage vehicles. Twentyfive people were shown five cars, one of which was a rebuilt salvage vehicle.  Only five of the twenty-five were able to spot the rebuilt wreck.

httpv://abcnews.go.com/video/playerIndex?id=8666173

We are seeing a signification number of cases in which dealers represent to consumers that a car or truck was not previously wrecked.  The consumer then buys the vehicle based on the representation.  Typically, mechanical problems occur, and the consumer takes the car in for repairs.  Only then does the consumer learn of the prior wreck.

Sometimes, dealers are unaware of the prior damage to the vehicle.  However, several things might indicate that, even if the dealer denies knowledge, it might have known of the prior wreck -

Carfax or Autocheck Reports – Many dealers run reports from Carfax (www.carfax.com) and/or Autocheck (www.autocheck.com) to determine whether either of those databases lists any prior wreck of or damage to a vehicle they intend to sell.  An honest dealer would pass on the reports if they indicate prior damage.  Some dealers even advertise the availability of Carfax reports.  A consumer attorney can usually subpoena records to determine whether a car dealer secured such a report and failed to pass it on the the consumer.

Certified Preowned Vehicles – Consumers feel good about buying what car dealers call “certified preowned vehicles,” because consumers believe that the vehicles have been thoroughly inspected by one or more mechanics.  If the inspections actually occurred, the inspecting mechanics were competent, and the car dealer passes on to a consumer all learned information, then the inspection process should be a consumer benefit.  However, if there was serious damage to the certified preowned vehicle, and such damage is not disclosed to the consumer, it is likely that the dealer knew about the damage (as a result of the inspection process) and did not disclose it to the consumer.

Superior Dealer Expertise – A car dealer should know, much better than the vast majority of consumers, how to look at a vehicle and determine whether it has been wrecked.  A car dealer can usually do so without the extensive inspection underlying a certified preowned vehicle.  Therefore, if prior damage and/or shoddy repairs would be apparent to a typical car dealer, such could indicate that a car dealer knew of the damage or repairs prior to sale.

Prior Auction Sale – It amazes me how many cases we review which involve a car dealer buying a damaged car at auction, repairing damage to the car, and then selling the car to a consumer without disclosing the repairs.  Is is usually a fairly easy task to obtain documents from the auction, and repair orders from the dealer’s body shop, and thereby show the dealer knew about the damage and/or repairs.

Before you buy a car, have it inspected by a competent person.  This will hopefully help you avoid finding out later information that would have caused you to pass on the car.

The National Motor Vehicle Title Information System is now online.  It is a system that allows users to obtain information about branded titles.  Read about it, and its limitations, here – http://www.nmvtis.gov/

If you are considering purchasing a used car, you should always conduct some research before signing on the dotted line.  Aside from general research about the type of vehicle you are considering buying, you should consider using a commercial information database such as Carfax (www.carfax.com) and AutoCheck.  These databases can provide useful history about the background of a specific vehicle.  Here’s an interesting commercial for Carfax:

Source: Reuters

There are numerous laws and regulations that apply to car dealers.  Some laws apply to sales, others to leases, and yet others only to financing.  I address in this post only a few potential claims, or causes of action, against a car dealer for improper tactics used when selling or leasing a vehicle.

State “UDAP” Statutes – Each state is likely to have its own “UDAP,” or unfair and deceptive acts or practices, statute to protect consumers.  These UDAP statutes generally protect consumers from fraudulent, unconscionable, unfair, or deceptive consumer transactions.  They usually apply to a broad range of consumer transactions, including those related to vehicle sales, leasing, and financing.  The Texas general UDAP statute is the Texas Deceptive Trade Practices – Consumer Protection Act (“DTPA”).

Fraud – Fraud is a claim available for consumers when a car dealership essentially lies about or fails to provide sufficient information to a consumer regarding a material fact related to the sale or lease of a car or truck.  A material fact is generally a fact which would be important to the average consumer.  The mileage of a vehicle, a vehicle’s title being branded as “salvage,” and a vehicle previously being flooded are some examples of material facts.

Negligence – A car dealer owes certain duties to customers when selling or leasing vehicles.  If a car dealer breaches, or fails to fulfill, those duties, it can be liable to a car buyer for resulting damages.

State Statutory Finance Claims – Many states have laws in place to protect consumers from certain types of finance fraud, and also the charging of usurious (unlawfully high) interest rates.  Some such laws also protect consumers from “cash price violations,” or improper charges being included in the amount financed.

Federal Odometer Act – The Federal Odometer Act is is a narrow federal law that protects consumers from those who tamper with a vehicle’s odometer.  The Act provides for damages and attorneys’ fees for a consumer affected by someone rolling back the miles on a car or truck purchased by the consumer.

This is just a brief summary of some laws and causes of action available to consumers in the car fraud context.  Every case is different, and you should contact a lawyer regarding your specific situation.