Used car buyers beware: Don’t get hosed by flood-damaged cars


flood damaged cars partially submerged on a street

Used car buyer beware! That shiny used car with low mileage might look like a good deal, but take care that you aren’t buying a flood damaged car. It’s estimated that some half million vehicles were flooded in Texas and Louisiana during Hurricane Harvey, and there are sure to be many more after Irma. Resellers can be pretty good at the cosmetics so you could be deceived – engine and electrical problems may not be readily apparent.

The National Insurance Crime Bureau (NICB) defines a flooded vehicle as one that has been completely or partially submerged in water to the extent that its body, engine, transmission or other mechanical component parts have been damaged.

According to Ronny Pucino, a body shop owner in Rhode Island, there are three main elements in a car that are affected by flooding: the upholstery, the engine and the electronics. The extent of any damage depends largely on the level of water that the car experienced. Cars that have had wheel-top level damage may be able to be salvaged if the owner acted quickly to address the damage. But when water reaches as high as the dashboard, it is more likely that the engine and the electronics have been compromised and the car will be unsalvageable.

Being alert for flood-damaged cars should be of concern to all used car buyers, regardless of geography. Often, damaged cars are professionally refurbished and shipped to other parts of the country to be sold. Experts say that flood-damaged cars end up going to places where consumers won’t be likely to be on alert. Even when cars “clean up nice,” they may well have electrical or engine damage. Flood-damaged vehicles often surface in auctions and “for sale by owner” scenarios.

Edmunds.com offers good tips on how to avoid buying a flood damaged car. They present 6 tell-tale tips, which we’ve summarized, but click on the article for more detail.

1. Get a vehicle history report.
2. Be alert to unusual odors.
3. Look for discolored carpeting.
4. Examine the exterior for water buildup.
5. Inspect the undercarriage.
6. Be suspicious of dirt buildup in unusual areas.

The NICB has released this list of Flood Vehicle Fraud Prevention Tips:

  • Select a reputable car dealer.
  • Inspect the vehicle for water stains, mildew, sand or silt under the carpets, floor mats, headliner cloth and behind the dashboard.
  • Check for recently shampooed carpet.
  • Inspect the interior upholstery and door panels for fading.
  • Check for rust on screws in the console or areas where water normally doesn’t reach.
  • Check for mud or grit in the spare tire compartment, alternator crevices, behind wiring harnesses, around the small recesses of starter motors, power steering pumps and relays.
  • Check inside the seatbelt retractors by pulling the seatbelt all the way out and inspect for moisture, mildew or grime.
  • Check door speakers as they will often be damaged due to flooding.
  • Have a certified mechanic inspect the vehicle prior to purchasing it.
  • Ask about the vehicle’s history. Ask whether it was in any accidents or floods.
  • Inspect the title and ownership papers for any potential or questionable salvage fraud.
  • Conduct a title search of the vehicle.
  • Look under the hood for signs of oxidation. Pull back rubber boots around electrical and mechanical connections for these indicators: Ferrous materials will show signs of rust, Copper will show a green patina.
  • Aluminum and alloys will have a white powder and pitting.
  • Trust your instincts: If you don’t like the answers or the deal sounds too good to be true, walk away!

CARFAX offers more tips for detecting and avoiding flood-damaged cars. They also offer vehicle history reports for a fee, which could be a worthwhile investment if you find a car you’re thinking of purchasing.

One other consumer service is the NICB’s VINcheck, a free service provided to the public to assist in determining if a vehicle has been reported as stolen, but not recovered, or has been reported as a salvage vehicle by cooperating NICB members. You must have the Vehicle Identification Number (VIN) to perform a search, and a maximum of five VINCheck searches can be conducted within a 24 hour period.

DMV.org talks more about VIN checks, offering a diagram showing where you can typically find a car’s VIN. They note that although there are many free VIN services, if you want a detailed report, you may have to pay a fee. We think you should also invest the cost for having a mechanic check over a used car before you buy it. Both steps could be a worthwhile investment to save you from later headaches. A good VIN check can tell you these things about a vehicle:

  • Past ownership.
  • Any liens held on the vehicle.
  • Vehicle maintenance.
  • Title history blemishes.
  • Faulty odometer settings.
  • Flood damage.
  • Accident history.
  • Car title check.
  • Whether a vehicle was determined to be a lemon.
  • Airbag deployments.

Caught on camera: Insurance fraud backfires on scammer


Insurance fraud is a multi-million dollar crime that costs all of us money. This video from the dash cam of a UK driver shows just how brazen insurance fraudsters can be – but fortunately, the woman had a record of the scam on her dashboard camera.

This type of scam is a global phenomenon – here’s a 2015 compilation of comically inept fraudsters caught on camera. They are comical because there is a record. Without the video, some could turn into costly claims.

These criminals are all pretty ridiculous, but don’t be fooled – there are many sophisticated fraud rings that conduct “swoop and squat” and other staged auto accidents. See our prior post Fraud Watch: Staged Auto Accidents for some video examples of four common types of staged accidents.

The Coalition Against Insurance Fraud offers more information on some common staged auto crash scams, along with tips for prevention and what to do if you are involved an accident that seems suspicious.

Dash cams haven’t really taken hold here in the U.S. but if you are interested, here’s an article from Digital Trends that talks about the pros and cons: Take a hint from the Russians: It’s time to protect yourself with a dash cam,

A rogue’s gallery of insurance fraudsters, 2016 style


Insurance fraud is a crime that we all pay for in the form of higher premiums for our home, auto and business insurance. However, 10% of the population still thinks that “insurance fraud doesn’t hurt anyone.” Nothing could be further from the truth! According to the Coalition Against Insurance Fraud, fraud steals about $80 billion a year across all lines of insurance. Yikes. And for some people, the cost is much higher than dollars and cents – if you are unlucky enough to be one of the victims of these criminals, you could lose your identity, your good credit, your life savings, or even your life.

Every year, the Coalition Against Insurance Fraud issues lists a rogue’s gallery of the worst, most egregious insurance criminals from the prior year. Recently, they named 8 criminals to the 2016 Insurance Fraud Hall of Shame. One of the purposes in publicizing the list is to educate and alert you, the consumer, about the scope and type of fraud crimes that are out there.

Here’s a sneak preview of some of their crimes to give you an idea of the severity – you can read the full stories of their crimes from the Coalition Against Insurance Fraud site.

  • Neighborhood blows up in botched insurance arson
  • Epic crash ring braked after $279-million whiplash spree
  • Lawless libido traps cheater in partner-swap comp romp
  • Oh deer! Mob associate uses deer parts to stage car wrecks
  • Samaritan scammer shotguns legs to steal disability insurance
  • Dad murders infant for $750,000 of life-insurance money
  • Bedridden girl starves to death while nurse shops
  • Doctor peddles $60 million of unneeded drugs to poor people

Reporting insurance fraud

One way to combat this type of crime is to report it. Here are some ways to do that.

 

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Imposter fraud and debt collection scams top the list of 2016 fraud reports


This week is Consumer Protection Week – but honestly, consumers should be on their guard about potential scams and fraud every single week of the year. In 2016, people who reported fraud to the Federal Trade Commission (FTC) paid $744 million to scammers – with a median payment of $450. Those are only the reported cases – many people are embarrassed to admit that they fell for a scam. Experts put scam crimes more on the order of $30 to $40 billion a year.

In looking at the top fraud in 2016, the FTC said that of those who specified how they were contacted by scammers, 77% said it was by telephone, with only 8% contacted by email and 3% by traditional mail. That tells you to be alert for suspicious calls.

Also notable in 2016, the FTC reports that for the first time, imposter scams passed identity theft for the number of complaints, and debt collection was the top complaint for the second year in a row.

Imposter scams are scammers who pretend to be someone else: the IRS, debt collectors, tech support – the FTC has posted examples of different types of imposter scams that have been reported.

Why are people susceptible to fraud?

Scammers are masters of human nature and prey on our weaknesses. They appeal to fear by posing as the IRS, debt collectors or other authorities, making harsh threats and you-must-act-now demands. They exploit our hopes of winning or getting something for free or for an incredible price. They take advantage of naive computer users with popups, phishing scams, unsafe apps or links and social media targeting.

In What Makes People Fall for Online Fraud? Rick Paulas reports on an AARP survey about risk factors involved with falling for Internet scams.

” … there’s a correlation between fraud victims and the activities people perform online. For instance, those willing to post their birth dates or relationship status on social media are 8 percent more likely to be victims of online fraud than those who keep mum. Those who sign up for free trial offers are 10 percent more likely to get swindled. People who click on pop-ups are 16 percent more likely. “Victims tend to be more open,” Shadel says. “But people wise up. They realize you shouldn’t be clicking on every pop-up you get.””

The article 10 Types of People Who Fall for Scams, Schemes and Cons by Marilyn Lewis says that:

Victims include older people, yes, but also younger ones. Educated and undereducated. White-collar and blue-collar. Dumb people and smart ones. The Stanford study says:

An emerging conclusion in profiling research is that there is no generalized profile of a “typical” victim. Profiling studies that analyze victims by type of scam, however, have yielded a clearer picture of scam-specific profiles. In other words, while everyone is vulnerable, some people may be more vulnerable to particular scams than others.

The article is very interesting, examining various demographic groups and what type of scam is likely to be most successful for that group. For example white men are the most likely victims of investment fraud; lonely people are more susceptible to dating fraud.

Even relatively sophisticated and alert people can let their guard down and fall for a scam. One way to keep suspicion high is to periodically review the FTC Scan Alerts to learn the latest scams that are circulating. It’s also important to report fraud should yo be come a victim. That is how the authorities catch criminals and alert others about new schemes.

Crime alert: more on card skimming fraud


card skimming fraud

Card skimming fraud is a type of fraud that uses devices to read your credit card and steal your pin or password. It’s a type of theft that frequently happens at ATM machines, but it also is common at gas stations and any place that you swipe the magnetic strip of a credit or debit card. The latest scene of the crime are self-checkout stations in supermarkets.

The problem is that data on your credit card is stored in magnetic strip on the back of your card and the magnetic strip is not encrypted. Cheap devices are readily available to scan that data. Devices used to be large and unwieldy, but have become increasingly smaller and cheaper. These devices can be cleverly disguised and affixed to retail outlets that read your cards. They can also be used anyplace your card is scanned.

To foil card skimming fraud, new cards contain chips with encrypted data so those cards are safer in theory. We say “in theory” because it’s an enormous undertaking for banks, gas stations and retailers to replace the card reader stations and convert to chip-enabled card readers, so many still rely on reading magnetic strips. As long as your credit cards have a magnetic strip, they are still insecure.

This ABC News video clip is about 8 minutes long  –  a good investment for a quick education about what skimming is, how to spot it and steps to take to prevent it.

Here are skimming fraud prevention tips we’ve gleaned from the experts over the years.

  • Use well lit, well-trafficked ATMS and gas stations with security cameras; go inside banks; be particularly careful at freestanding ATMs.
  • When using an ATM or paying at the gas pump, check for anything unusual and be alert for any devices that may be affixed. Look for anything that protrudes from or seems affixed to the machine, any color differences, any unusual stickers. Look for nearby mirrors, pamphlet holders, speakers, or devices that could house a camera.
  • Always cover the keypad with your hand to shield from any cameras that may be trying to record your PIN. It’s also a good idea to touch several keys with your fingers to thwart anyone trying to grab your pin via infrared heat detector readers.
  • Don’t let anyone “help you” at an ATM or credit card reader.
  • When paying at a restaurant or any retail outlet, don’t let anyone walk away with your card, have them read the card in your presence so that they don’t harvest your information with a small pocket-skimmer.
  • Check your bank account regularly to ensure funds have not been taken.
  • If you spot anything suspicious at an ATM or a  self-service gas or grocery kiosk, alert the business or the police right away.