Title Fraud in Car Sales: A Growing Threat Post-Vermont Loophole Closure

Our customer service team is inundated with calls every day. Among these, we've noticed a worrying increase in title fraud incidents, particularly after the Vermont loophole was shut down. This blog aims to highlight five key types of title fraud that all car buyers need to be aware of.

Impact of the Vermont Loophole Closure Previously, transferring a car title sometimes involved using the Vermont loophole. This loophole let people get a title for almost any vehicle using a Vermont bill of sale. However, this led to rampant abuse and fraudulent title acquisitions. Its closure was necessary to combat these scams, with states like Florida issuing warnings against using Vermont registrations.

  1. Duplicate Title Scam: A Common Con A common fraud is the duplicate title scam. Scammers request a replacement title from the DMV, using it as loan collateral, and sell the original title. When the buyer tries to transfer it, it's already outdated, leading to rejection by the DMV.
  2. Fraudulent Mechanics Liens: An Elaborate Fraud Another fraud involves fake mechanics liens. Scammers claim unpaid car repairs to obtain a title. However, DMV audits have found many of these claims to be false, leading to serious consequences for the fraudsters and involved shops.
  3. Risks of Title Transfer Services Some fraudsters offer title transfer services for a fee, requiring you to sign over your vehicle. This not only poses legal risks but also the danger of never getting your vehicle back. Also, selling multiple cars without a dealer’s registration can lead to legal troubles.
  4. VIN Number Alteration: A Serious Offense Altering a vehicle's VIN number is a serious crime. Some try to swap VIN numbers from different vehicles, but law enforcement and inspectors are trained to spot these alterations.
  5. The Perils of 'Parts Only' Vehicles Vehicles marked as “Parts Only” or “Nonrepairable” come with a destruction certificate, making them ineligible for titling. Despite this, some attempt to restore and title these vehicles, which is illegal.

Beware of Counterfeit Lien Releases Another scam involves forging lien release documents to remove liens from a vehicle. This can lead to legal action when discovered by DMV or banks.

Adapting to the New Title Acquisition Landscape Since the Vermont loophole closure, the process of obtaining titles has changed significantly. Indicating the need for extra caution. Avoid shortcuts in the titling process and always follow legal procedures. Thorough background checks on sellers and staying informed about these risks are crucial.

In this era of rampant title fraud, protecting your investments and finances is crucial. Stay vigilant, informed, and ensure your vehicle transactions are legal and ethical.

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