Taken for a ride: loopholes for lemons and the secret history of salvaged cars

It sounds like something from the Twilight Zone. A Scottsville woman goes into a local auto dealership and shells out nearly $20,000 for a late-model used car. Within a year, she discovers the car has a secret past: Before she bought it, it had been totaled in a tangle with a tractor-trailer. But the dealer won't give her more than $8,000 to take it back.

"It's a quagmire out there" is how Art Bushey, owner of Brady-Bushey Ford, describes the world of used-car sales. You won't hear any disagreement from Mickie Sykes Damron. Nearly two years ago, Damron bought the used car from Brady-Bushey that would soon introduce her to a questionable– if not outright shady– aspect of the used-car business.

The story begins on April 6, 2001, at Brady-Bushey, a dealership on Pantops Mountain. The salesman, Bill Bennett, had sold her a used car three years earlier that she'd considered a good deal; she had no reason to expect this car would be any different.

This time Damron was looking at a 2000 Honda Accord Coupe V-EX. After taking it for a test drive, Damron thought she'd found the perfect car. But she did notice that the paint on the rear driver's side panel didn't quite match the rest of the car. Damron agreed to an extra $1,000 for a entire-car paint job. Including the new paint, Damron paid $19,516 and took possession on May 11.

The problems began almost immediately. While cleaning the interior, Damron says, she noticed cuts in the leather seats. She paid C-Ville Auto Upholstery $280 to repair them.

She also began noticing a shaking in the steering wheel, and the brakes began to squeal loudly. She took the car to University Tire, which found the tires did not match, and the car badly needed brakes. She purchased four new tires and paid for a lifetime brake job for the front and rear.

Damron called Bennett to complain about the car's condition and says she asked him to find her another vehicle so she could trade in the Honda.

She says, however, that Bennett did not want to take the Honda on trade. Instead, he advised her– as the car was still under factory warranty– to take it to Brown Honda & Dodge, a dealership on Route 29. On June 7, she took the car to Brown's, where the seatbelts on the driver's side, front and back, were found "faulty" and replaced.

Matters continued to worsen late on the evening of Saturday, December 15, 2001.

"While driving home from a movie with my three-year-old daughter and my neighbor's two daughters in the Honda," says Damron, "the car completely cut off on Rio Road. I had no brakes or steering."

It was around 11pm, and she was able to guide the car down to Walker's Auto Body, where she called her neighbor for help.

The following Monday, she called Brady-Bushey. Again, she says, she was advised to take the problem to Brown's. Brown's replaced the motor, which was under warranty, as well as the fog light on the driver's side and the wiring to it, which wasn't working.

The repairs took 37 days, during which time Damron rented a car at a cost to her of $1,150.

"I called Brady-Bushey again to try to trade the car and to complain about its performance," Damron claims, "but got no response. Bill Bennett did not return my calls." Bennett says he has no recollection of this call.

In February 2002, three weeks after getting the Honda back, Damron says, she began to smell gasoline every time she drove it. She returned to Brown's, which found a fuel leak, replaced the gaskets, and fixed a rattle in the transmission. Once again, the repairs were covered under Honda's warranty.

By this time, Damron's car wasn't the only thing she had to worry about. She and her husband had split up the previous October, and she was raising their daughter alone with no financial cushion. That could explain why she took no action when a Brown employee allegedly remarked that cracks on the steering wheel suggested that the car could have been in a "horrendous accident."

After putting her house up for sale and retrieving the Honda from Brown's a second time, Damron set a goal: "to get rid of my car."

After advertising it in all the local papers for two months with only one response and no sale, she decided to explore trading it in.

In early July she found a car she liked on a used-car lot in Amherst. The salesman at Amherst Motors test drove her Honda, and then called her into the manager's office.

He offered her $5,200– about a quarter of what she'd originally paid.

But that wasn't the biggest shock of the day. The salesman handed her a Carfax vehicle history report that showed the Honda had been branded as salvage in Maryland. It had then been sold and retitled– this time with a clear title– in Virginia.

"I was floored!" says Damron.

Determined to learn exactly what had happened to the car before she bought it, she says she immediately called Brady-Bushey and was told to come in and see Art Bushey the next morning.

It was never a secret that the car had belonged to Rodney Deane, Brady-Bushey's accountant, and his wife, Nancy, who had been the car's main driver. They had traded it in on a Jeep. According to Damron, when she first noticed the mismatching paint, salesman Bennett said he would call and find out what had happened. When he returned, she says, he reported that the car had been "tapped."

Now, as she sat in Bushey's office over a year later, complaining about Bennett, Bushey allegedly told her the salesman had resigned several months earlier. Bushey then handed Damron a copy of the title he had on file for the car, which was indeed clear and nowhere mentioned the car having been declared salvage.

Relations quickly soured. As Damron describes it, "Earlier Mr. Bushey assured me that he would take care of this problem, and now he was telling me to hire an attorney, and he would see me in court. I became extremely upset and started to cry. I told him I was working two jobs and struggling to feed my daughter, and there was no way I could afford an attorney."

According to Damron, Bushey changed course again. Now he was telling her not to worry, because the dealership had insurance for "fraud situations." He instructed her to prepare a settlement request. Damron asked for the price of the car plus the $4,530 she'd paid in interest over the intervening 14 months. Bushey allegedly read over the proposal and suggested she add the amount of the repairs not covered by warranty.

"He told me I was owed that money too," she says. In the end, Damron tallied the cost of the repairs, new tires, the lifetime warranty for the brakes, and the rental car (as well as the price of a rear spoiler and sun-roof visor she'd bought and had Brady-Bushey install before she took possession). Grand total: $27,319.

On August 22, Damron drove to Maryland to get a copy of the salvage title to include with her claim. She says she delivered it to Bushey the next day.

According to Damron, who has neatly chronicled her receipts and notes in a black binder, she called the dealership and left messages for Bushey on September 9, 10, and 11, but didn't connect with him until September 12, when he "said he would call me back after he called his insurance company." He did not call back, she says.

On September 13, Damron directly contacted Brady-Bushey's insurance company, Lee Insurance, and was told to call Dave Jonske at Selective Insurance in Mechanicsville, as that was the office that handled claims.

What Jonske told her was particularly disturbing. "He told me he had asked for the claim file several times but had not received it," she says.

So she faxed the salvage title, list of expenses, and related documents straight to Jonske that day. Ten days later, she called Bushey, whose "entire demeanor," she claims, had changed yet again.

"He told me that the insurance company had denied the claim, and he felt he owed me nothing," Damron says.

Although she kept after Bushey, she says that on October 1 she got the same response: "He told me that he did not owe me a penny because he had done nothing wrong. He informed me that he had turned all the paperwork over to an investigator at the DMV" and been told that the car's clear title had been issued legally.

Damron went back to the paperwork she'd found in Maryland, which listed a State Farm Insurance office in Washington as the applicant for the salvage certificate.

She tracked down the agent who had handled the claim, Gerene Behrens, who, Damron says, informed her that what had really happened to that Honda back on May 9, 2000, was no "tapping."

Damron says Behrens told a story of a tractor-trailer coming across the median and striking two vehicles. As Behrens wrote in a letter: "Due to the extensive damages to the vehicle, State Farm deemed it a total loss and paid the owner the value of the vehicle." (The owner, who'd had the car less than six months, received $21,000.)

As for the wrecked vehicle, it was "towed to Insurance Auto Auction in Laurel, Maryland, for salvage sell."

Damron called Bushey for the last time on October 16, 2002, to share this new information with him. "He was very abrupt with me and did not want to hear about my new findings. He told me again that he did not owe me anything, and it was no longer his problem," she says.

Bushey, she claims, "told me I should just trade the car and get rid of it. I asked him if I could trade it with Brady-Bushey. He responded, 'You certainly can,' and offered me $8,000 for the car." When Damron replied that he was "lacking greatly in integrity," he again told her to "hire an attorney."

***

Welcome to the world of title-washing.

Title-washing begins when a car has been so badly damaged that it's branded salvage, which usually means damage from a collision– but can also mean damage from flooding, fire, theft, etc.– that an insurance company deems severe enough to render the vehicle a total loss. The car is then rebuilt and issued a clear title– i.e., one that doesn't mention the car's history of damage and repair.

Such secrecy can be deadly. Seattle television station KIRO reveals that a 21-year-old driver was killed and her brother permanently disabled when a truck sideswiped their rebuilt Volvo and its roof sheared off. Parents of the victims say they never would have bought the car had they known it had been wrecked– or that its roof support posts had been glued on, not welded, after the wreck.

Consumer's Union, publisher of Consumer Reports, conducted a six-month investigation into what it calls a "shadow auto industry." The study, which analyzed data from the National Highway Traffic Safety Administration and Carfax, concluded that consumers have no way of knowing for sure the history of any used vehicle.

"It's not uncommon for rebuilt wrecks to hopscotch from state to state, receiving new titles 'washed' of any hint of past problems," says Consumer's Union. The report also found that while wrecked cars can be safely rebuilt, there are financial incentives to cut corners. "Consumers should especially steer clear of newer-model vehicles that have been totaled and rebuilt, unless a trusted mechanic can vouch for the repairs," the report advises.

That describes Damron's Honda Accord to a T– minus the trusted mechanic.

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"It was ugly," Art Bushey says when asked about his experience with Mickie Damron and the used Honda. But that doesn't mean he believes he owes Damron anything, since he was as surprised as she was to learn of the car's past: "We did not know the DMV would issue a clear title for a vehicle with a branded title."

Bushey learned about this aspect of his business, he says, when, in the early days of the dispute, he asked DMV inspector W.T. Jackson to review the Honda's history. As Jackson later explained it to me, a car such as Damron's can be issued a clear title in Virginia if it meets three criteria: the damage is 75 percent or less than the car's value; the rebuilder is licensed by the DMV; and the car passes inspection and contains no stolen parts.

Even so, Jackson tells rebuilders that "It's probably better to let people know [a car's] got a salvage history, even when you're not required to." He adds that he's been called to testify– i.e., to explain how a salvaged vehicle can be granted a clear title– in a number of civil cases lately.

Jackson's advice on Carfax: "Don't take that as total gospel."

That's advice Bushey wishes he'd been given when the Honda first came onto his lot. Although he doesn't routinely order Carfax reports for used cars, he did order one for the Honda. He showed me the report when we met, and indeed, there's no mention of the car's Maryland salvage certificate– which illustrates why such reports can be unreliable.

So why did the Amherst dealer's Carfax show the fuller history?

Perhaps it was because the salvage certificate wasn't issued until five months after State Farm had declared the Honda a total loss, and it still hadn't been entered into Carfax's database when Bushey ordered the report seven months after the accident.

Since he says he had no knowledge that the car had been sold for salvage and rebuilt– and because his insurance carrier concluded there was no fraud involved– Bushey is unwilling to do more than buy the car back from Damron for "whatever it's worth."

When asked about his estimate of $8,000, he says that was based on the high mileage Damron has put on the car. She concedes she drives about 2,000 miles a month.

Bushey and Bennett– who now sells cars for Dennis Enterprises– seem to believe that Damron should have known what she was getting into.

"She knew it had been damaged," Bushey says.

Bennett went further when I asked whether he had told Damron the car had merely been "tapped."

He contradicts that version of the events, claiming that he spoke to neither Rodney nor Nancy Deane. Instead, Bennett claims it was obvious the car had been hit on both sides. How could he know? "It's easy," he says. "Just look at it."

Bennett claims that Damron knew the Honda had been "around the horn," he says. "I never would have bought it," says Bennett. "She bought a well-used Honda."

Nancy Deane owned the car only from January 26 to March 10, 2002. Why had she kept it such a short time?

"My husband trades in cars like he trades in gum," she replies, adding that when she got the car, she'd actually wanted a convertible (which she eventually got).

When Deane heard about Damron's experience and the car's history as salvage– and the fact that Virginia allows clear titles to be issued for such cars– she said, "That's a horrible thing."

Deane assumes that means that the seller, a Northern Virginia firm, lied to them. In her presence, Deane claims, her husband had asked the same question he always asks when buying a used car: "Has this car ever been involved in an accident?"

"The guy said no," she says. It's possible that the seller didn't know, although the car's title history suggests that the Northern Virginia seller probably bought the car from the rebuilder.

What about the mismatched paint? Deane doesn't remember a problem with the paint– and, in any case, she says she had "no problem with the car" during the six weeks she drove it.

***

In Virginia, as in many other states, this procedure is perfectly legal. But it won't be for long– if a bill introduced in the House of Delegates this session passes.

"Once branded, always branded." That's how Colonial Auto Center owner Carter Myers summarizes the intent of House Bill 1521, which was introduced in the General Assembly earlier this month. The bill requires that the titles of repaired and rebuilt vehicles be permanently branded to show that they are salvage vehicles.

Myers, a longtime auto industry activist and now chairman of the National Automobile Dealers Association, has stepped up the fight to ban title-washing.

"Virginia's taking a lead position," says Myers, "and hopefully other states will follow."

Myers knows how frustrating title-washing can be. "I've had that happen two or three times," he says. In "a couple of situations," he says, his dealership bought the car back.

"Unless they're a body-shop expert," he points out, it's unlikely that a buyer would be able to detect signs that the car had been rebuilt.

The bill, whose patron is Clarke Hogan (R-South Boston), applies only to cars that are rebuilt and retitled in Virginia. It wouldn't have helped Damron, since her had been rebuilt in Maryland and issued a clear title there before being brought into Virginia. However, if she'd had access to a nationwide database that tracked all vehicle titles, Damron might have quickly learned of the car's history– and such a database is in the works.

The National Motor Vehicle Title Information System– which NADA also supports– was originally part of the Anti Car Theft Act of 1992. The system, which is now in the test stages, would link motor vehicle-department computers in all 50 states and the District of Columbia so that consumers could research a car's title history without the frustration and time Damron was forced to invest.

"Most people wouldn't want to buy a salvaged vehicle," says David Regan, NADA's legislative affairs director. For their part, dealers consider such cars a "severe problem," Regan says. "Dealers don't want to take those vehicles into inventory in the first place."

If House Bill 1521 becomes law– and especially if it's buttressed by the system in all 50 states and D.C.– Virginia consumers will be able to easily ascertain whether they're looking at a car that's been damaged and rebuilt.

In the meantime, there are few guarantees that the car you buy isn't a junker. But experts do have tips. [See sidebar.]

* * * * *

Damron, meanwhile, continues to hope that Brady-Bushey will offer some kind of restitution. Her attorney, David Heilberg, wrote the dealership in late December to say that Damron will be suing for breach of contract.

The car has been problem-free now for several months– so much so that when Damron listed the amount she felt Brady-Bushey's insurance carrier should reimburse her, she added that she would like to buy the car back at the "'salvaged' fair market" price.

"I have put," she explains, "quite a bit of work into this vehicle." Most people would consider that an understatement.

Barbara Nordin writes The Fearless Consumer, a weekly column (which is taking this week off).