Vehicle Title FraudHere’s another video in our series about vehicle title fraud. A lot of times, it’s difficult to get titles for vehicles that are gray market or imported vehicles. Some of these vehicles are these JDM vehicles, the Nissan Skyline, and some of the other desirable cars that come out of Japan. The Japanese kei trucks are an example, but it could be any kind of vehicle that was originally not manufactured for the US market. These vehicles are desirable because they’re unique, something that people want to have, and they don’t sell them here.
Importation Challenges and LoopholesThe problem is getting these vehicles imported and titled. There is a 25-year exemption for importation, but that may not solve title problems. Sometimes, if the vehicle is newer than 25 years, loopholes are used to try to get around that. However, if you use these loopholes, you run the risk of having legal problems. For example, there was a company called Soho Imports that allegedly defrauded customers by selling JDM cars with fake titles and import documents.
Customs Requirements and Document FraudWhy does this happen? A lot of times, these cars won’t pass through customs even if they qualify for the 25-year exemption. If the vehicle doesn’t have proper documentation or paperwork, it still won’t get through. For vehicles newer than 25 years, they must meet certain criteria, like having airbags and anti-lock brakes. Some sellers fake import documents to bypass these requirements. They might even change the year to make it look older than 25 years.
Consultation and Expert AdviceRemember, you have access to live, one-on-one consultation with the undivided attention of a licensed, certified expert in this subject and many others. We want to listen to your story, hear your questions, and provide expert advice about your options. We’re here to help you understand your situation and guide you through your choices.
The Risks of MisrepresentationDMV fraud often involves altering documents, such as the year on the title, to misrepresent the vehicle. For instance, a client attempted to title a VW Beetle manufactured in Mexico in the mid-2000s. Although Beetles are desirable because they’re cheap, reliable, and easy to work on, this client faced customs and title issues. The suggestion to label it as a 1978 model was problematic because the VIN and part dates wouldn’t match. Misrepresenting documents to government agencies can lead to serious consequences.
Legal Consequences of FraudIn Florida, individuals allegedly faked titles and import documents. They ended up on probation and accepted a plea deal, which saved them from facing more severe penalties. If you’re considering importing a vehicle, ensure all paperwork is accurate and properly completed. Any misrepresentation can lead to revoked titles and legal troubles. Remember, signing documents under penalty of perjury carries significant risks.
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The Challenge of Obtaining a Mechanic’s Lien Title for a Vehicle So why is it so hard to get a mechanic’s lien title for a vehicle, and why is it not always the best way to try to get a title? For many years, repair shops, garages, and towing companies have used the mechanic’s lien or towing lien process to get titles for vehicles. A lot of times, they thought vehicles were abandoned and wanted to get a title. They even sometimes took payments from outside parties to go through a fake mechanic’s lien process to get a title. A lot of times, people with title problems will ask, “Can I just put a mechanic’s lien on the vehicle?” or “I’ll just file for an abandoned mechanic’s lien.”
The Purpose of Mechanic’s Lien: A Payment Protection for Repair Shops Here’s the problem: the mechanic’s lien process is a privilege provided to licensed automotive repair shops in order to get paid for work when a customer fails to pay the bill. So, if someone brings in a car to get fixed, then decides they don’t want to pay, the mechanic’s lien is designed to help the repair shop get compensated for their work. However, that privilege is frequently abused—or maybe “expanded” is a better word—to try to get mechanic shops titles for vehicles under questionable circumstances.
Government Response: Tightening the Mechanic’s Lien Process What the government has done, and what different state DMVs have done, is make the process very, very difficult. It’s harder than any other process, such as getting a bonded title or a court-ordered title, because they want to ensure that if a repair shop is using the mechanic’s lien, it’s for legitimate reasons.
Common Cases of Mechanic’s Lien Fraud A very common case of fraud involves repair shop owners engaging in title fraud. This fraud often involves creating fake work orders and records, claiming to be filing a mechanic’s lien, and then using the process to get titles for vehicles that may have been bought at an auction without a title, purchased through Craigslist, or have a lien they want to remove.
Government Oversight and AI Monitoring The government scrutinizes each mechanic’s lien application and audits them. They also use AI and algorithms to monitor shops filing a high number of mechanic’s liens. The government checks the shop’s payroll and sales tax records to estimate the shop’s business volume. For example, if a shop with only one or two employees files more mechanic’s liens than usual, it raises red flags.
Legal Consequences of Filing a Fraudulent Mechanic’s Lien If caught, repair shops involved in title fraud could face severe penalties, including prison terms of up to 20 years and restitution to repay any fraudulent profits. For example, in a recent case, shop owners were charged with creating fake repair orders and selling vehicles illegally, resulting in charges for title fraud.
Mechanic’s Lien: Powerful but Heavily Scrutinized A mechanic’s lien is a powerful tool, but because it’s often misused, it is scrutinized more than any other type of paperwork. If you’re considering using a mechanic’s lien to get a title, it should only be used when someone has brought a car to a shop for repairs, has signed a repair order, and then hasn’t paid.
Alternative Title Methods If you have a vehicle that needs a title and are considering a mechanic’s lien, there are other methods that might work better. Options like a court-ordered title, bonded title, or other procedures are often easier to execute and less scrutinized than a mechanic’s lien. These methods can be found on our website.
Title Caution and Potential ConsequencesThis is why you want to be very, very careful about how you get your car title. If you use a, um, sketchy or illegal method, it could come back and bite you. Here’s a story about a DMV clerk that was selling illegal titles through a DMV scam that she was running, where she had people that were selling these titles to people that didn’t have the right paperwork, and she was making 800 bucks per title. Overall, it was $3 million worth of titles that were processed. This was an auto tag agency in Miami, and there was a stolen vehicle that had, um, lowjack on it, and they found it in a body shop. But they found that there was a title for it—somebody had issued a title for that vehicle. But they tracked it back and they found that this title clerk allegedly had issued the title, and they found a lot of her records for vehicles were for fraudulent titles, and she was making a lot of money.
Consultation Services ReminderIn the meantime, remember you have access to live one-on-one consultation, undivided attention of a licensed certified expert in this subject and many others. We want to listen to your story, we want to hear your questions, and give you expert advisement of your options. We want to tell you what we know about your situation and what options you have. Now back to reading.
Legitimate Title Acquisition AdviceSo anytime you’re looking to get a title for a vehicle, you want to make sure you’re doing it legitimately. You’re not using any kind of fake mechanic’s lien, you’re not doing any kind of tax evasion, you’re not paying somebody to do something illegal because all the titles for these vehicles are getting revoked. So whoever had the title is losing out, and if you were in on the scam, they’re looking at other prosecutions. So make sure that you’re getting your title legitimately.
Importance of Proper DocumentationRemember, a title is a legal government document. You can’t buy one from a company; you can’t download one from the internet. You have to get it from the government. Yeah, they’re going to make you jump through a few hoops, but they do that to protect you as the owner. Because once they give you a title, you don’t want anybody to take it away from you. So, the same way that you have to provide a lot of documentation to get a title, that means no one can get it from you later without the same kind of documentation.
Avoiding Scammers and Ensuring LegitimacySo get your title the right way—do it legitimately. Use the legitimate source. Don’t pay any of these fly-by-night or scammers that are out there trying to sell you titles using some kind of, you know, dubious means. Make sure that whoever is getting a title for you can explain in detail how they’re going to do it, so you know it’s not being done illegally.
Title Problems in Car BuyingSo don’t think just because you buy a car from a licensed Automotive dealer that you’re out of the woods on title problems. There’s a very common scheme that some used car dealers, mostly used car dealers, occasionally a new car dealer will do this that will be a financial fraud that will harm consumers. It’s called floor plan fraud and not many people know this, but dealerships do not own their cars for cash just like you. Dealerships have a car loan.
The Dealer’s LotIf you look at all the cars on a dealer’s lot, for example, if you have, let’s say, 20 cars on a used car lot and each car on average is $115,000, that’s $2,300,000 of cars sitting on that dealer’s lot. Most dealers don’t have $300,000 in cash extra or if they do, they don’t want to have it sitting in their cars. So what they do is they get a line of credit that’s called a floor plan or a floor line, and that floor line finances their vehicles for them. So when they buy a vehicle from an auction, from a trade-in, from who knows where, the bank actually writes a check for that vehicle. The dealership doesn’t, and the bank holds the title just like on your car financing.
Selling the CarWhen the dealership sells the car, the dealership calls up the bank and says, “Hey, I sold that 2020 Toyota Camry, send me the title.” The bank says, “No problem, send us the money.” So the dealership sells the car, takes the money from the customer, sends it to the bank, and the bank sends them a title, and now they can put it in their name.
Cash Flow ProblemsSo sometimes what happens is if a dealership is running short on cash, what they’ll do is this: they will sell you a car, that 2020 Toyota Camry. They take, let’s say, $20,000 from you; you paid for the car. Instead of taking that money and giving it to the bank to pay it off to get the title, they’ll just keep it to pay payroll, pay their rent, pay their expenses, whatever. And now the bank is still holding the title. Now you can’t get a new title registration for your car. It’s called floor plan fraud or being out of trust with your lender, and it creates a problem because you have a temporary tag that runs out. Maybe the dealership gives you another paper tag; next thing you know, the dealership goes out of business.
Real-Life ExampleIn this case, this was in Massachusetts; this is just one example. This happens all the time. 25 people have reported being defrauded by the scheme. 25 people that say reported police determined that Edward Secui, 46, allegedly receives cars on loan from a local auction but does not get the titles until he pays the auction in full. So the auction in this case is the lender. The cars are then sold at the dealership; he completes the sale, takes the payment, attaches fake or forges license plates, and promises the title will be mailed—of course, which they never do.
Victims Left HangingSEC stops responding to the victims and never pays the auction. The purchasers never receive the title, cannot register the vehicle because the auction company still owns the vehicles. They are in the process of repossessing them. So the lender can actually take the car from you even though you paid for it. Now if it’s a small used car auction, they might go through with that. Sometimes if the floor plan lender, the bank that lent the money, is a larger lender like, you know, Wells Fargo or Chase or somebody like that, they might not take a car from a consumer who knows they could legally. They have the right to, but they may just pursue it against the dealer.
Protecting YourselfSo how do you protect yourself against this? What we recommend doing if you’re buying a used car from a dealer, obviously they can’t hand you the title because they’re going to do the registration and title paperwork. Even if you’re financing the vehicle, go through your own bank. Have them show you the title. Just say, “Hey, before I do this deal, show me you have the title.” If they don’t have the title in hand, tell them that you’ll come back and pay for it when they have the title in hand.
Ensuring a Smooth TransactionHere’s what they’ll have to do: they will have to pay that floor plan lender for the car before they get your money, and then they’ll get your money to cover where they got the money from. They might say, “Well, we can’t do that.” Well, guess what? If they can’t do that, if they don’t have enough cash in the bank for one car to cover one car, do you want to do business with them? So if they can’t show you, just flash the title. They don’t have to give it to you; they don’t have to sign it to you to show you they have it in their hand. We don’t recommend buying the car and tell them, “Well, it’s at a floor plan bank.” No problem, go pay it off, get the title here, and then I’ll pay you for the car, or I’ll sign loan documents for the car, whichever you’re doing.
Avoiding Floor Plan FraudYou don’t want to leave that to chance. Remember, we’re talking about your hard-earned cash you saved up for this vehicle, or even if you’re financing the vehicle, your hard-earned cash that you have to pay for it. And don’t think that if the bank doesn’t give a title that you don’t have to pay for the vehicle. If you finance the car through another lender, whether it’s your own bank or through the dealer, that lender you signed a contract to pay off the loan even if you don’t get a title or the bank doesn’t get a title, you still have to pay the loan because they paid the dealer.
Red Flags and Final ThoughtsSo you don’t want to have your money at risk by having a dealer that doesn’t have a title. The dealer might say, “Well, we don’t have the title on hand because it’s at the bank.” Hey, no problem. Just pay off the bank, get the title, and I’ll pay you for the car. If the dealer is unable or unwilling to do that, it could be a red flag that they don’t have that much cash laying around and they’re running tight, which means you know that might be a decision to make or that they’re trying to scam you.
ConclusionSo don’t fall for floor plan fraud. This, you know, is one example of an article where this happened here recently in Massachusetts, but this happens all the time. Dealerships going out of trust, dealerships leaving people holding the bag. This is a way you can avoid it as an informed consumer. If you like this reading, be sure to click on a few others on our channel to see if there’s other information that might be helpful to you about this same subject or maybe even other related subjects that could assist you with your resolution of your issue.
Title Status and Lien Status InquiryWhen buying a vehicle or working on getting a title for a vehicle one of the questions that comes up is how do you check for the current title status and lien status. While it may not be necessary to do this when you already bought the vehicle and you’re trying to get a title you definitely want to try to check the title status before you buy a vehicle. If you’re buying a vehicle from somebody and they’re not handing you over a legal title certificate, you do want to perform searches to make sure that the vehicle is eligible for a title.
Caution with Online VIN CheckersNow one of the things that a lot of people will do is go online to Carfax, VINCheck, or one of these online VIN checkers. Be very leery of those sites. If you read the disclaimers, it tells you, “This is not the official title record.” This is just some arbitrary third party that may have some records but not all of them.
For example, those websites cannot check for liens, period, end of story. Lien information is very tightly controlled, and sites like Carfax might tell you “no liens found,” but that’s because they can’t even search for them. It’ll say in the disclaimer that liens are not part of it.
Also, title records may not be totally available on the online searches. So how do you do it? Well, the only official source for title records is the government. Every state has a department that issues titles and keeps records. In most states, it’s called Department of Motor Vehicles; some states call it Motor Vehicle Department; some states call it Department of Transportation; in some states, it’s done by another agency like the Secretary of State.
That government organization/agency is the only—and I mean only—official record of the title. If you get the official record from that agency, you will be 99% sure it’s accurate. There are a couple of exceptions, but that’s where you want to get it: right from the horse’s mouth. Don’t do these online VIN checks because they’re very misleading.
Checking Title for Lien in New YorkHere’s an example of where you can check it in the state of New York. Not every state has anything online; in most states, you will have to go in person to a government office or the DMV, show your photo ID so that they can make sure they’re giving out the information to somebody appropriately. There is a federal law that prohibits giving out certain title information to random people—it’s privacy rules.
In New York, you can look up some information now. It’s not going to tell you who the owner is, but it will tell you things like:
The way you do it is you go to this website—it’s a title status website for the DMV. You check off if it’s a vehicle, put in the VIN number, what year it is, and then a make (like Mercedes-Benz or Chevrolet, that kind of thing). Hit continue, and it’ll give you some basic information. Again, it won’t tell you everything, but at least it’ll start you on the right track.
Research for Title AcquisitionNow keep in mind, if you’re trying to get a title for a vehicle, in most cases you don’t need to look this up. You may have to send in a DPPA request (Driver’s Privacy Protection Act request)—our website will give you more information on how that works. But if you’re doing a bonded title or a court order title, most of the time you don’t need to look this up; the government is going to look this up for you when they issue the title.
However, if you’re looking to buy a vehicle and the seller is not quite complete with their documents—they don’t have a title, they don’t have the ownership documents—you might want to do some of this research for due diligence prior to giving them any money. Because once they have your money, they’re not going to do any work for you.
And remember: no matter what stack of paperwork that seller gives you—bill of sale, notarized registration, proof of all these things—you could have a stack of papers three feet thick, but unless it has a title, all that stuff is worthless. Don’t let a big pile of paperwork fool you into thinking you have what you need to get a title. The only paperwork you need is one thing, and that is a title—the original legal title certificate.
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