The Expert Podcast

Our sales staff gets hundreds of calls, sometimes over a thousand calls, every day, and we hear all kinds of stories from people who need to get a title for a car. With the cancellation of the Vermont loophole earlier this year, man, the number of stories we're hearing and the amount of fraud that's out there is going through the roof. Today we're going to talk about five different types of title fraud that you need to watch out for as a car buyer.

Getting a title or even transferring a vehicle used to be a loophole a loophole in the past. You could go through Vermont and use a bill of sale to get a title for almost any car. The problem is that many people were using that to get titles for vehicles that they weren't supposed to have a title for. That's why they cancelled it because it was used for fraud and scams. In fact, some states put a big note on the door of their DMV, like in Florida, saying that if you bring us a Vermont registration or a Vermont license plate, we're going to think it's fraud. It's a fraud alert; that's what they called it. So now that the states put pressure on Vermont to shut down the Vermont loophole, all kinds of frauds are popping up, and we're going to talk about five of them.

First of all, there's a scenario people are using that's called duplicate title fraud. If you have a vehicle that you own, somebody will take their old title; right here's a title certificate; you've seen it; this is what you want; they'll hide it; they'll go to the DMV; and they'll ask for a replacement title certificate. They'll tell them I want a duplicate, so they'll get a new title. And then what they'll do is take that new title, bring it to a title pawn company, a lean company, or some type of car lender, and they'll get a loan against their car and hand over that new title to them to hold as collateral for security. And then what they'll do is take their old title and sell it to another buyer while there's still a lean on the new title. Now what happens is that when the buyer goes to try to transfer that title over to them or register it, the DMV tells them no, your title you have is an old one; it's outdated; you can't use it, and now they're out of luck and out of their money. We're getting a couple dozen calls a day from people doing that title fraud, that duplicate title fraud, so be very, very careful of that.

The other type of scam that we're seeing is fake mechanics. People are getting cars that they're not supposed to have a title for; maybe there's a lean holder; maybe there's a bank owed on it; maybe it's a problem with the title transfer and they're paying some company that maybe is a body shop to put through a fake mechanics lean saying that hey, somebody brought this car to my body shop; they didn't pay their bill; and now I want to get a title, and they go through the process; it usually takes two or three months before they get a title for it. The problem is this is the next scam, the next fraud that the DMVs are now investigating just like they spent a year or two cracking down on the Vermont loophole now they're going to do the same thing with these fake mechanics leans the DMV commission as have already announced in the news that they are going to audit these mechanics lean CU more than half of the mechanics leans that are put through are fake they're not really that somebody brought the car in didn't pay their bill and now they want to get a title it's just somebody wants to use the process improperly so they're auditing them a lot of these titles are going to get revoked we're even hearing that from the Vermont process many people that went through Vermont got a Vermont registration got a license plate and then put it in their state their state is revoking those titles now and making them go through the state process the same will happen with these mechanics lean a lot of them will get revoked and the body shops that put them through are going to have their license under scrutiny.

Another one is called a title transfer fraud here's how this works there may be if you have a title problem a person on Craigslist somebody advertising on Facebook hey I'll get you a title for your car give me 500 bucks and what they do is they make you sign over the ownership to them so now they're the owner of the vehicle and they go through some process to get a title and then they supposedly will sign it back over to you here's two problems with that first of all you don't know what they're doing to actually get a title the way they're getting a title might not be legal right it might be something improper might be shady and so that puts you at risk if you now get the title signed over to you it could get revoked from you also you don't know that that person's actually going to sign the vehicle back over to you they might put a lean on it put a Title Pawn on it so be very aware if any um title method that is offered requires you to sign your ownership over to this company or a person on Craigslist or Facebook a lot of them are Fly by Night somebody working from the basement um you got to be aware because in Most states if you sell more than two or three cars in a year you have to register as a car dealer and if you don't register as a car dealer they could revoke and seize all your assets so if at any point the State Licensing Bureau discovers that this person is transferring all these cars back and forth they might say say you're a dealer without a license we're seizing all your assets and they can seize your vehicle that belongs to you.
Another fraud we're seeing is altered VIN numbers where when a person tries to get a title and the VIN number that they have is somehow ineligible or it doesn't qualify for a title they're going and finding another VIN number on another vehicle scraping it off and putting it on their vehicle the problem with that is VIN numbers are not interchangeable they're attached with tamperproof rivets and if an inspector or police officer anybody who sees that vehicle notices that the serial number is not attached correctly they're going to do an inspection on the vehicle there's more than one VIN number Hidden on vehicles there's up to 15 uh VIN numbers that are concealed on your car you may not know where they are but the police do and if they find the other one now they're going to get you for Vin tampering so be very careful of that another one related to that is a partson vehicle these cars that come out of co-art or IAA a lot of them are sold as Parts only junk in Florida they call it certificate of Destruction these vehicles have a VIN number that's been made ineligible to be used as a car doesn't matter how good of a condition they're in they're um not qualified to be issued a title or registration because the insurance company said these are for parts only in fact one of the things we hear a lot is in the state of Texas they call that designation a nonrepairable vehicle that's what they call it the problem is people see it on Copart and they don't when they see non-reparable they don't look at it as okay this car is non-reparable they look at it as like a challenge hold my beer I'll fix this vehicle you say it's non-reparable watch me I'll repair it that's not what it's about it's about that the VIN number has been cancelled.

The last fraud we're seeing is fake lean releases a vehicle has a lean on it with a bank let's say Wells Fargo Chase uh Bank of America TD Bank any bank has a lean on a vehicle from a car loan and the person wants to get a clear title they Forge a lean release from that bank they send it to the DMV and then it gets removed the problem is the DMV is going to notify the lean holder and when they get that notification they're going to do an investigation find out it was forged and then put the lean back on and then also prosecute whoever did the bank fraud and in many cases that's prosecuted at the federal level the US Secret Service prosecutes most bank fraud so it's not your local PD that's going to you know come and slap you on the wrist it's a federal government agency that does these so be very aware.
This whole you know Vermont cancellation was a big deal because it was an easy way for people to kind of maybe get over on the system and not do it the right way um how do we know that you know our our um inquiry call volume is more than double since this Vermont thing was canceled because now people don't have an easy way out there's ways to do it in fact if you can look back on our videos um we started advising people not to do Vermont going back three years even before they canceled it because it wasn't the best way to go even if it was possible it was more expensive because you had to pay sales tax to Vermont and they charged you a huge tax bill you had to jump through two Hoops first Vermont and then your state and in many states they actually didn't accept it so we recommended using another method the other methods were simpler easier cheap ER but a lot of people still wanted to do Vermont so now that it's gone it puts you in a place where you kind of have to do it the way that the state wants you to but that's not a bad thing just don't feel like you have to get over on somebody on the state to get a title the right way to do it now is actually cheaper faster and easier than Vermont ever was so um those are the frauds that are out there be aware you don't get caught up in one because you're trying you're frustrated that you can't do your famous Vermont loophole um you're not missing out on any anything and you know um I talk to our sales staff you know a couple times a week and they tell us what are the calls they're getting and the number of frauds is increasing dramatically there's people that are um losing their vehicles because their title was done improperly there's people that are getting calls from regulatory agencies or government agencies because they did something improper there's people that are getting scammed out of their money they're sending money off to who knows where and now they months later they have no car no title and their money's gone so be aware of that be smart check the backgrounds on all of your um sellers if somebody's selling you a car make sure that they're Le the legal owner or they're not sketchy so that way you don't lose your hard-earned cash.