Title Washing Can't Make Salvage Safe

A $4 billion national racket has turned up the heat on itself by going too far and dipping into the crown dump of federal crash test vehicles. Alerted that some of its twisted and mangled vehicles have been rebuilt, retitled, and sold to unsuspecting consumers, the National Highway Traffic Safety Administration is more determined than ever to seek federal legislation to end this title laundering fraud and put the bad guys out of business.

After suffering severe damage in a variety of tortuous tests, NHTSA's crash test vehicles are sold at Government Services Administration public auctions. The sales receipts are "branded" with the message, "Salvage Only-Not to be Titled for Highway Use (wrecked/inoperable)." But like other sales of wrecked vehicles supposed to be sold for salvage or parts only, that doesn't stop unscrupulous dealers and con artists from rebuilding the vehicles, slapping on a fresh coat of paint, getting the vehicle titled in a state with lax salvage laws, then selling the often unsafe vehicle at an inflated price to some unsuspecting buyer.

NHTSA learned that two of its crash test vehicles, a '96 Mustang GT convertible and a '95 Tahoe, were sold to consumers with laundered titles. NHTSA alerted the Department of Transportation's inspector general's office, which is now on the trail of its crash test vehicles. NHTSA reviewed the history of 494 cars it crashed between 1995 and 1998 and found that 25 had been repaired, retitled, and resold. Another 67 have been retitled, but the feds are still following their trail and are unsure whether they were sold as salvage or with clean titles.

NHTSA's embarrassing experience highlights the national problem of title washing that runs as high as a million vehicles a year. The problem is that each state has its own laws governing what makes a car salvage and what is simply repair. The resulting patchwork means unscrupulous dealers can move wrecked cars across state lines and get a new title that does not reflect their actual salvage status. NHTSA tried to address the problem in the last big highway bill.

A title-branding bill that would have set uniform national standards for what is salvage and what is reparable was critically weakened and finally defeated with consumer advocate backing in the last Congress. The standards were too weak-weaker than many existing state standards-and would exempt most used vehicles, particularly older vehicles, critics argued. A new effort by NHTSA and a coalition of dealer, manufacturer, and auction associations is already underway this year to satisfy these concerns and pass tougher legislation. In the meantime, consumers can check NHTSA's Web site (www.dot.gov) for the VIN numbers of all the vehicles it has crashed from 1996 to 1998, or use a title search service.

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