State Farm Insurance recently settled a 40 MILLION dollar class action suit in the State of Iowa for consumer fraud relating to the sale and titling of salvaged vehicles.
During the course of a 3 year lawsuit, which began as me suing a local used car dealer in conciliation court for selling me a salvaged Mini-Van, while representing to me, and the State of Minnesota as previously owned, used vehicle. (specifically belonging to his wife)
As this case has progressed (I won in conciliation and arbitration upon his appeal, and we are now in District Court after his appealing the arbitrators verdict) I have learned that Liberty Mutual, the insurer at the time of the accident which totalled the van, and Insurance Auto Auctions (located Nationwide) share a "title stamp" enabling an agent of the salavge auction yard to sign, stamp and transfer titles on a regular basis. The catch is that they are routinely failing to disclose the odometer readings and indicate the "Damage in excess of 70% of vehicle value" marker, which designated the vehicle as a salvage.
They then are free to sell it to highest bidder at Auction, usually Used car dealers, without parts or salvage licenses, and these vehicles end up on the road with no inspections, improper and illegal titling, and the purchaser is oblivious to this.
My advice and WARNING to anyone purchasing from a used dealer (especially smaller, corner-type lots) ask to see the vehicle title paperwork from the dealers purchase. CAR reports, etc. Are useless for this type of fraud, as the title "skips" branding, and unless the previous owner (public information) is contacted prioir to purchase, you may never know if there was a major accident involving that vehicle. ALOT of small used car lot owners also own other vehicle related businesses - specifically BODY SHOPS and Paint shops.
If major companies like State Farm and Liberty Mutual are actively involved in this practice routinely, you can bet others are as well.
Contact a GOOD consumer lawyer if this is something you may be a victim of.
We (my Attorney) are in the process of filing a Class - Action Suit in Minnesota against Liberty Mutual and Insurance Auto Auctions Inc. -as we have evidence of widespread practice of this procedure.
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