A Dirty Secret in DIY Car Purchasing

March 14, 2019

by Mary Jo Rosso, Staff Attorney at CARPLS

Joe thought he got a deal when he purchased a salvaged-title car on an auction website from a registered broker. He needed the vehicle to get to work across town, an improvement over the long commutes he was taking via public transportation at all hours of the night. When the police pulled him over for failing to signal, he was shocked when he was told that there was no registration for his car in his name and that the license plates are fake. He received a ticket for his moving violation and his car was impounded.

Joe comes to the CARPLS desk at the City of Chicago Department of Administrative Hearings and wants to get his car back, but he has to prove that he actually owns it. In these cases, the City doesn’t see Joe as the owner. And, if Joe proves he is the owner, he will owe thousands of dollars in fees at usually no fault of his own. He needs a car, but he can’t afford to reclaim the one he thought he rightfully owned, and buying another car will be very difficult.

We are seeing more catch-22 cases like these at the advice desk at the City of Chicago Department of Administrative Hearings. Often, we recommend that clients decide if they should show ownership and be liable or just walk away from an unwinnable situation.

How can this be when the state of Illinois refers to their vehicle titles as some of the most secure in the nation?

Insurance companies typically discard vehicles with salvage titles after total losses due to accidents or natural disasters. A car with a salvage title cannot be registered with the state and cannot be driven, but they retain some value. These vehicles can be certified as “rebuilt” through a specific process performed by licensed rebuilders. However, some unscrupulous registered brokers, independent agents working with online and in person auction sites, will skip this step. There’s a low bar to entry as a registered broker and not all of them act according to the law. Instead of properly rebuilding and registering a vehicle, they will place fraudulent plates on the car and place it for sale.

This is just one of the perils of buying a car at auction. Unscrupulous insurers may fail to accurately brand the titles as salvaged vehicles. In addition, rebuilders may “cobble them together so they appear pristine, but in fact, they are structurally unsound and may not offer protection in a subsequent collision.”

By far, the biggest problem we see is that often consumers have no way to know the true history of a used car they seek to or have purchased. Even more problematic is that many of the touted sites, such as Experian and Carfax, are not always able to help consumers avoid dangerous vehicles because not all the information is provided to them.

So, what is the solution? At this time, we encourage clients to make complaints with the Illinois Attorney General’s office and to file suits against the company or individual that sold the car. The concern here, however, is that the registered brokers are generally individuals or small businesses in different localities or state, so it can be impossible to track down and collect from.

The best way to address the problem is through consumer education and prevention.

Many people rush through the process of purchasing a car for a myriad of reasons: they desperately need it for childcare or a job, they do not understand the process, or they have little money. A prospective purchaser can do their due diligence by first reading the materials available to them online via the State of IL and the City of Chicago. Even if they’re not buying at a public auction, we encourage them to follow these steps to start.

And remember, “just because a used car is cheap and seems OK during a test drive doesn’t mean it’s safe to buy.” Consumers can hire a qualified mechanic to inspect the car before making a purchase and should obtain a vehicle history report from more than one provider. Additionally, consumers can check for signs of previous damage by looking for rust or grime behind the gas or brake pedals.

We need to advocate for disposal of damaged beyond repair vehicles and track salvage titles through a more comprehensive national electronic database available to the public. The current system, created in 2009, is incomplete. “Some states don’t supply information on totaled cars to the database, and others don’t make inquiries to the system before providing clean titles to people.”

Illinois’ law made progress toward protecting consumers of used cars. In July 2017, Illinois enacted a law, which provides an implied warranty of powertrain components (the parts of a car that provide power and make it move) on cars purchased within 15 days or 500 miles (whichever is lower). This law doesn’t apply to salvage vehicles or those with more than 150k miles but allows consumers some protection against cars that show immediate issues soon after purchase and also gives them a little more time to get it into a mechanic for a thorough check. This is just a start in the legislation necessary to protect purchasers.

Because of the way the current system is set up, we in the legal aid community strongly advise clients to be very skeptical in the car buying process, whether through a used car dealer, auction, or individual seller.

This blog entry is for informational purposes only. It is not intended to be, nor should it be interpreted as legal advice. If you have a legal problem, please consult with an attorney. CARPLS legal aid hotline can be reached at 312-738-9200.

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