Title washing is a highly illegal method of cleaning a branded title, i.e. flood title, salvage title, fire damaged, rebuilt, etc.
This act of title washing works due to the lack of communication between state titling agencies and a lack of a standard nationwide method of assigning brands to titles.
What will happen is an unscrupulous buyer of a vehicle will continue to apply for new titles in different states until the title is essentially washed clean of it's brand.
This would therefore make the branded title a clean title and the vehicle would be resold as a mechanically sound vehicle, when it really isn't.
In order to try and protect consumers, the government is tightening up to prevent title washing of branded titles.
The U.S. government has authorized the U.S. Department of Justice (DOJ)to oversee the National Motor Vehicle Title Information System (NMVTIS).
Since 1992, the American Association of Motor Vehicle Administrators (AAMVA) has acted in the capacity of third party operator of this program and still operates the system today.
The history gets a little lengthy and complicated, so to read more please visit The Anti-Car Theft Act (the Act) of 1992.
What the NMVTIS is designed to do is set a nationwide standard to protect consumers by monitoring both car theft and to prevent title washing.
This system will be funded by user fees (the consumer pays for reports) and states are currently being "encouraged" to participate, but it is not mandatory until January 1, 2010.
As with most anything the government publishes, it is a little hard to understand and I'd refer you back to www.nmvtis.gov for additional information.
I'm not sure if the information reported from the NMVTIS will include past titling transactions or if it will be information from this day forward.
It does appear that states will be required to perform instant title verification checks and the way they've worded it leads me to believe the information provided to consumers will be from this day forward.
This seems to me that older vehicles and their title transactions will not be included and you may still need to take precautionary measures against buying an originally salvage title vehicle with a currently clean, washed title.
Unless you are a certified mechanic or very good at inspecting vehicles for these types of damage, I'd always suggest these two actions:
Vehicle history reports are not always 100% accurate, as some companies may self insure. When this happens a vehicle is damaged and repaired with the vehicle history reporting companies being none the wiser.
If damage to a vehicle has been reported, which is more often the case, then it will surely be listed on a vehicle history report.
Here you can check (free) how many reports exist for a vehicle.
Get a VIN Check
See the basic information about your vehicle and how many records we have. Enter your VIN to get started!
Don't have a VIN? You can still get a report on a car!
I always recommend having a vehicle inspected by an independent mechanic. Even if you are buying from a larger new car dealership.
This is not so much because the car dealer will intentionally try to deceive you, but they may notice damage from a relatively smaller accident and not report it to you, because it does not have an effect on the vehicles safety or driveability.
Where this could impact you is at resale time...a vehicle that has been in an accident can have a greatly reduced value.
This is even more so if the vehicles accident has yet to pop up on a vehicle history report and does after you purchase it.
From what I understand it can take 3-6 months before an accident appears on a vehicle history report.
Now, a buyer of your vehicle does not need to be an expert at vehicle inspections, but only needs to look at a vehicle history report to know it's been in an accident...Get ready to take less money for it.
Not many buyers out there are willing to pay top dollar for a vehicle that's been involved in a collision...No matter how small!