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Beware of Superstorm Sandy damaged cars

‘Too good to be true' private car sales expected

Published November 13, 2012

Used car deals that sound way too good to be true usually are.

Although the chances of Canadians getting soaked with flood damaged vehicles are slim, there are always sharks in the water fishing for marks.

With 100,000 to 250,000 new and used cars damaged in the wake of Superstorm Sandy from the Carolinas to Maine, Canadian automotive consumer protection organizations warn there’s bound to be some sweet-sounding but foul-smelling private deals on the Internet and in print ads.

“After Hurricane Katrina, we did see some flood-damaged cars coming into Canada. We don’t know exactly how many, but there’s absolutely no reason to think it won’t happen again with Sandy,” said Terry O’Keefe, manager of communications and education for the Ontario Motor Vehicle Industry Council (OMVIC).

“It’s only a matter of time before some of these vehicles find their way back into the marketplace and obviously most will be in the U.S. but dealers and consumers in Ontario are going to have to prepare for the possibility by making sure they educate themselves,” he added.

Unlike the U.S., Canada has strict mandatory vehicle branding requiring that the information and history of a car brought into one province from another is transferred to the other jurisdiction’s vehicle registry system. A car’s vehicle identification number (V.I.N.) is a serial number used to track its history and determine how it has been branded.

With some American states having no mandatory branding laws, O’Keefe said it is easy to “title wash” a vehicle’s branding.

“If a vehicle is flooded in New Jersey, it’s reported to the insurance company and the insurer writes it off, pays the owner and brands the car as flood damaged. It’s possible to take the vehicle to a state that doesn’t have mandatory branding, register it there and the flood branding disappears from the title,” O’Keefe explains.

That car can then be moved around and sold with a clean title.

Cars that are uninsured or have minimal coverage won’t get branded if there’s no claim and the owner can dry it out, clean it up and sell it privately or trade it in for another car with no one the wiser.

According to Ontario’s Motor Vehicle Dealer’s Act, car dealers must provide all disclosure to customers. This includes branding, collision history, any damage over $3,000 that has occurred, whether the vehicle was registered in another jurisdiction and where and if the auto was immersed in a liquid that penetrated the interior floorboards.

“There are curbsiders (illegal vendors posing as private sellers or small business owners) and private sellers who get vehicles from salvage auctions. What’s going to stop them from going to the U.S. and buying them there? It may be a new source of inventory and that’s a concern we have,” O’Keefe said.

In Ontario, flood-damaged vehicles are deemed un-repairable and are by law not allowed on the road at all. Water, especially salt water, can slowly corrode vital parts and electronics and pose a variety of hazards.

“It could show up in a collision when airbags don’t deploy. It could show up when you’re doing 120 on the 401 between three tractor-trailers and your engine shuts off, or when the steering fails. It’s insidious and that is why the Ministry of Transportation says these vehicles are not allowed on our roads,” said O’Keefe.

Because of the fairly intense scrutiny of vehicles imported from across the border, strict Canadian branding laws and guarantees of up to a $45,000 refund from dealers who don’t disclose a car’s true history, the numbers of flood damaged vehicles coming into the country are expected to be low.

“The number of those vehicles that will make it across the border will be miniscule because there is a far bigger market in the U.S., so why would you have deal with the border crossing if you didn’t have to?” asks Bob Pierce, director of member services with the Used Car Dealers Association, adding: “There’s too many hoops to go through.”

Pierce said imported autos must be processed by the province’s registrar of motor vehicles, with a vehicle’s paperwork submitted 72 hours before it arrives at the border, inspected at the border and then inspected by a mechanic after crossing the border and finally inspected by the dealer to ensure compliance with UCDA’s regulations.

“The only way you’re going to run into a problem is if you latch on to an email scam or you go through a paper and believe ads that say ‘Buy your car in the U.S. 2009 Audi A5 for $4,000.’

If you buy into that nonsense then you’re going to get stung,” Pierce added.

In the U.S. the National Automobile Dealers Association offers 10 inspection tips to detect flood-damaged vehicles, warning that “nefarious individuals may buy these vehicles, thoroughly clean them and attempt to resell them.”

Car buyers on both sides of the border would be wise to review NADA’s inspection tips.

1. Check the vehicle’s title history by VIN through commercially available vehicle history reports from Experian’s Auto Check (www.autocheck.com), or through the National Insurance Crime Bureau’s VinCheck (https://www.nicb.org/theft_and_fraud_awareness/vincheck). The report may state whether a vehicle has sustained flood damage. In Canada www.carproof.com provides vehicle history reports.

2. Examine the interior and the engine compartment for evidence of water and grit from suspected submersion.

3. Check for recently shampooed carpet.

4. Look under the floorboard carpet for water residue or stain marks from evaporated water not related to air-conditioning pan leaks.

5. Inspect for rusting on the inside of the car and under interior carpeting and visually inspect all interior upholstery and door panels for any evidence of fading.

6. Check under the dashboard for dried mud and residue, and note any evidence of mold or a musty odor in the upholstery, carpet or trunk.

7. Check for rust on screws in the console or other areas where the water would normally not reach unless submerged.

8. Look for mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power steering pumps and relays.

9. Complete a detailed inspection of the electrical wiring system looking for rusted components, water residue or suspicious corrosion.

10. Inspect the undercarriage of other components for evidence of rust and flaking metal that would not normally be associated with late model vehicles.

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