What Is Title Washing?
Title washing is the act of removing information from a car title by illegal and fraudulent means. Criminals use title washing to remove information from a car title that could reduce the value of the vehicle – that includes things such as liens or rebuilt and salvage title brands.
Why Is Title Washing a Big Deal?
A victim of title washing usually ends up paying much more for a car than it’s worth. Hidden problems, such as accident damage, could expose a buyer to safety or reliability issues down the road.
Hides Reliability or Safety Issues
A used car that has survived a flood or major accident will likely have issues that could affect long-term reliability. For example, flood damage can cause corrosion or electrical problems that are difficult to repair. A significant collision may leave the vehicle with lingering issues that compromise a car’s dependability or safety.
Affects Selling Price
The types of issues hidden by title washing can have a significant impact on a vehicle’s value. For example, a history of severe damage can knock several thousand dollars off of a used car’s selling price. If a fraudster successfully washes the title of the vehicle, they can hide damage and sell a car for much more than it’s worth.
Title Branding
Laws are in place to protect consumers from unknowingly purchasing damaged or unsafe used cars. If a car has been in a serious collision or a catastrophe such as a flood, a state will issue a title brand. There are different title brands that reflect different types of damage. For example, when an insurance company declares a vehicle a total loss, a state will typically issue a salvage title. A vehicle that has been damaged by a flood is usually given a water-damage title. Title washing illegally removes those brands.
How Title Washing Works
Title-washing scams can be executed in different ways. Here are several:
Moving a Car to a Different State
The regulations that oversee title branding vary from state to state, and this presents an opportunity for dishonest sellers. If a car’s title has been branded in one state, it may be possible to remove the brand by relocating the car to a state where that brand isn’t recognized.
Altering the Original Title
Another approach involves physically altering the car’s title. A title is simply a paper document issued by a state showing a vehicle’s owner, basic information about the vehicle, plus any title brands a car may have collected. With some title-washing schemes, the seller makes physical changes to this document that remove all evidence of branding.
Applying for a New Title
An unscrupulous seller may simply reapply for a new title without disclosing the car’s history. The current laws overseeing title branding rely on the vehicle’s insurer or owner to report damage. If a vehicle’s owner doesn’t disclose the past damage, the title won’t reflect that information.
Is Title Washing Illegal?
Car title washing is illegal and is considered an act of fraud. It’s typically prosecuted as a federal crime and investigated as a joint effort involving federal officials and local law enforcement. Depending on the scope of the fraud, the investigation could also involve numerous other federal, state, and local agencies.
Operation Title Sweep, a large anti-fraud operation in the 2010s, is one example of a major law enforcement action against title washing. It was a joint operation between the FBI, the Texas Department of Public Safety, the U.S. Postal Service, and a half-dozen other federal and state agencies. They prosecuted a number of high-level fraudsters, including one case that involved over 600 cars and $3 million in losses.
Reporting Title-Washing Scams
If you have proof that you have been the victim of a title-washing scam, there are a variety of agencies you can call. At the state level, you can contact the attorney general or the department of consumer affairs. Local law enforcement is also a resource. Because title washing is a federal crime, the FBI has numerous anti-fraud resources that can help.
How to Avoid Title-Washing Scams
You can steer clear of title-washing scams by making sure you’re not relying solely on a car’s title for evidence of prior damage. A Carfax Vehicle History Report contains information you can use to avoid being victimized by title-washing schemes. Carfax Reports track a car using its vehicle identification number (VIN) and information from many different sources, allowing you to get a complete picture of a used car’s history.
With a Carfax Vehicle History Report, you can tell if a vehicle has suffered the type of damage that could result in a branded title. This report also includes smaller accidents that the vehicle may have been in and provides helpful mileage history you can use to verify a car’s odometer reading.
