Flooded Cars For Sale?

These days, they are a familiar site on TV: Waterlogged cars floating down the street. Hundreds of thousands of vehicles were flooded by Hurricanes Katrina and Rita. But CBS News correspondent Susan McGinnis reports for The Early Show's ConsumerWatch about what happens to them after the waters recede.

You'd think those flooded cars would be a total loss and sold for scrap. But experts say they present a golden opportunity for con artists who buy them cheap, clean them up, and then sell them to unsuspecting buyers.

"I bought a car that should have been sitting in a junkyard!" Diane Zelinski says. "It should never have been on a lot of a car dealer."

All Zelinski wanted was a safe car for her son Nate. The used Pontiac Grand Am seemed perfect. "It looked good. It ran good when we did the test drive," she says. But three weeks after Nate got the car, there was major trouble.

"I went to make a left hand turn and all of a sudden I heard bang. An extremely loud bang," Nate Zelinski says. "There was oil and pieces of engine block all over the place. It was actually chunks of the engine all over the place."

It turns out that his Grand Am had a soggy past. When Nate Zelinski checked out the car's history online, he found it had been in a flood a year earlier.

"I almost fell of the chair," he says. "I was like, 'Wow, my car was underwater at one point. It's not supposed to be that way.' "

In the last month, more than half a million cars were flooded by Katrina alone — cars that soon may be flooding the used car market after being dried out and cleaned up by scam artists.

"They'll spray new-car smell in it," Larry Gamache of Carfax says. "They'll replace the leather. They'll do things to make you think that it's a really cherry car, but it's a waterlogged wreck festering with bacteria."

Carfax is an online service that tracks the histories of used cars.

"One of the most problematic things about flood-damaged cars is that the airbags and anti-lock braking systems will fail eventually," Gamache says.

But when you first do that test-drive, he says the car will look great to the driver. He says that cars flooded by Katrina are especially hazardous.
"No consumer should be buying these cars, they're festering with ecoli, hepatitis, cholera," he says. "These cars may eventually make you sick and threaten your life. If that airbag doesn't deploy when you need it, you are in series trouble."

So how do crooks get away with this scam? By not just washing the cars but their titles, too, of any evidence they were in a flood.

Gamache showed McGinnis an online Carfax report of a 1999 Volkswagen Jetta.

"It was originally titled in Texas, where it was issued a flood damage title," Gamache says. "This car was damaged in flood water. It was moved to Illinois and the title was laundered. It doesn't have that flood damage indicator in the state of Illinois."
So a buyer in Illinois may never find out it was in a flood.

"It's unbelievable," Gamache says. "Somebody's driving that car today and they have no idea that car was sitting in flood water."

Diane Zelinski wished she knew her car's history before putting her son in the driver's seat.

"The three and a half weeks that he was driving in this car," she says, "he was driving around in a time bomb."

That's why it's important with any used car to get a report showing its full history. You can get a Carfax report online for less than $25. Also have mechanic check any used car before buying it.

Here are some signs you can spot if the car has been in a flood:

• Check in the trunk. Pull the carpeting up and look around the spare tire well for signs that water's been there. Look for any rust, mud, dirt or sand.
• Go inside the car and pull up the floor mats, such as the one from the driver's seat. Feel the floor and carpeting for dampness or moisture.
• Check under the hood. Look for a ring around the engine compartment — a water line that's marked by rust, mud or silt. It indicates that the engine was submerged in water at some point. If you see that, walk away.