As if life in California weren’t exciting enough, we are getting dumped on by unscrupulous insurers and auto dealers who profit from the illicit trafficking in total loss vehicles, including hurricane flood cars. Yup, that cute red number your teenager finds so alluring may be a killer car that swam with the fishes.
Remember the 500,000 flood cars that we all saw on TV, submerged up to their rooftops in the wake of hurricanes Katrina, Rita, and Wilma? Experts warned everyone to look out for them, since they are basically rotting from the inside out, and are totally unreliable.
According to the former president of the National Automobile Dealers Association, a lot of them were headed to auto auctions in–yes, you guessed it–California. The auctions advertise them on the internet and sell them to the highest bidders–typically, unscrupulous auto dealers who hose them down and spiff them up, to disguise the fact they are worthless, hazardous junkers. Then they sell them to unsuspecting used car buyers, usually for the going Blue Book price.
It’s illegal, of course, but enforcement to curb the frauds is extremely lax, and the profit margins are staggering. An unscrupulous dealer can nab a flood car at auction for $3,000, spend $1000 to power wash it and replace the upholstery, then turn around and sell it for $12,000. They don’t usually offer discounts, because that would arouse suspicion among potential buyers. It would also reduce their ill-gotten gains.
California, the nation’s largest auto market, is famous worldwide as a dumping ground for hazardous junkers. According to the DMV, a whopping 2.5 million vehicles that were totalled in crashes, floods, or other disasters are being driven on our roads. Look around you—even if you don’t own one, you may be killed or injured by one of the clunkers when the axle falls apart, the steering goes wacko, the brakes fail, or it stalls out in traffic.
Auto insurers and dealers have cleverly devised ways to profit from the frauds involving killer flood cars. When insurers total a car, it is rarely destroyed. Instead, they send totalled autos to auctions known as “salvage pools,.” which are basically an arm of the insurance industry. Insurers get a cut of the take at the auction. When the junkers are sold for fraudulent purposes, they command a higher price, enabling insurers to recoup more of their losses or even turn a profit.
Consumer groups and CA Insurance Commissioner Steve Poizner backed legislation to prohibit the sales of totalled hurricane flood cars in CA. But insurers like State Farm, Geico, Farmers, Allstate, and auto dealers killed the bill. It was SB 498, authored by Senator Jenny Oropeza. No Republican senator would vote for it, since it was opposed by some of their biggest contributors. While most democratic senators supported it, a handful of so-called “moderate” democratic senators who usually side with business interests blocked its passage.
keep an eye out for toxic flood cars that are contaminated with bacteria, mold, and mildew, have air bags that may not inflate in a crash, and electronic systems that are madly corroding away. Even if you don’t buy one, you or your family could end up riding in one. If you happen across a flood car, get in touch with CARS. We’re working to protect American families from flood cars, including testifying before Congress , working to get laws passed to prohibit dumping flood cars back into the market in the first place, and doing interviews with national news media.
More info about why flood cars are so hazardous in posted on our website, at: http://www.carconsumers.com.
Rosemary Shahan
President
Consumers for Auto Reliability and Safety