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KARE 11 Investigates: Legal loophole puts used car buyers at risk

Skyrocketing used car prices – and a gaping legal loophole in Minnesota law – lets potentially dangerous rebuilt wrecks be sold with hidden histories.

MINNEAPOLIS — If you’re shopping for a used car this year, experts say a loophole in Minnesota law could put you – and your family – in danger.

“I was risking my own life every time I got into my car,” Marissa Cartwright told KARE 11.

Four years ago, KARE 11 revealed how thousands of Minnesotans – like Marissa – were driving cars with hidden histories.

Their cars turned out to be rebuilt wrecks.

Even though they had been totaled, smashed or flooded, they had clean titles in Minnesota – hiding their true histories.

“If she would have been in an accident she could have very easily been killed,” Marissa’s father told us.

Credit: KARE 11
Marissa Cartwright didn't know she was driving a rebuilt wreck without airbags.

Why?  Because even though the title didn’t show it, he discovered the used car he bought for his daughter had been rebuilt after a serious accident.

The airbags were never replaced.

“It shows that it is a clear title,” he said, pointing to the official Minnesota title the family had received. “If something would have happened, I don’t know if I could have forgiven myself.”

A KARE 11 Investigation in 2017 revealed how the car’s true history was hidden because of a loophole in Minnesota law. It says that cars six years old or older – or worth $9,000 or less – can get clear titles even if they have been "totaled" by insurance companies.

Still happening 

KARE 11 documented how it’s still happening.

We checked recent wrecks for sale on an online auto auction – and found dozens of recent examples of badly damaged cars with clear Minnesota titles.

Credit: KARE 11
KARE 11 found 'totaled' cars advertised with "clear" titles on an auto auction website,

Here are some examples:

  • a Chrysler 200, totaled, but with a clear Minnesota title.
  • a Ford Fiesta, totaled, but with clear Minnesota title.
  • a VW Passat, totaled, but with a clear Minnesota title.

Online photos show each of them had serious front-end damage. None were listed as drivable.

What’s more, the airbags had been deployed.

Just like Marissa’s car, they could be rebuilt and resold with clean titles – hiding their history – even if the airbags were never replaced.

Salvage car magnet?

Thanks to Minnesota’s loophole, there’s evidence that Minnesota has become a Mecca for rebuilt wrecks.

“In Minnesota we see about a quarter of a million cars on the road with a branded salvage title – that’s in its history or currently right now,” said Emilie Voss of CARFAX, a private company that tracks cars totaled by insurance companies – whether the official state title shows it or not.

She says the Twin Cities ranks 12th highest in the country for salvage cars – and 9th highest for flood cars.

Credit: KARE 11
The Twin Cities ranks 12th highest in the nation for salvage cars, according to CARFAX data.

Although it’s often less visible, water damage can eventually trigger short circuits in modern auto electronic systems.

“These cars are literally rotting from the inside out,” Voss explained. “It can cause electrical issues. There can be mold issues. There’s a long list of things that can be caused by a vehicle that has a waterlogged history.”

She says rebuilders often clean up flood cars after hurricanes and move them to states where flooding is less common – and where buyers are less likely to be alert to the dangers.

Incentive to rebuild

Experts say soaring used car prices add to the financial incentive to rebuild wrecked cars – especially if the damage history can be hidden with the help of a clear title.

At KARE 11’s request, CARFAX crunched data for median used car prices in March this year and compared them to prices the same month one year ago.

Credit: KARE 11
Emilie Voss of CARFAX warns that Minnesota's loophole lets rebuild wrecks have hidden histories.

In the Twin Cities, there was a staggering 38-percent increase in one year alone.

The increase is even more dramatic if you compare prices now with prices from March 2020. Although the price obviously varies by each car’s model and age, this is how overall median used vehicle prices have changed during the past two years:

  • March 2020 - $18,525
  • March 2021 - $20,990 
  • March 2022 - $28,962

That’s an increase of more than $10,000 per car in just two years.

“Any consumer that’s buying a used car should do their homework – but especially in Minnesota with that loophole law,” Voss said.

Closing the loophole? 

After years of delay, the state legislature may be poised to take action to better protect consumers.

“It’s a great bill that really closes that loophole that we’ve had before,” said state Senator John Jasinski. (R-Faribault). “It’s a great consumer protection bill.”

Credit: KARE 11
State Senator John Jasinski co-sponsored a bill to close Minnesota's salvage title loophole.

Jasinski chaired a joint House-Senate Task Force which heard testimony last year from key stakeholders in the used car business – from dealers to rebuilders to insurance companies.

He said they crafted a bipartisan bill that would put a “prior salvage” brand on the title of older cars now exempted by the loophole.

“It doesn’t say the vehicle is unsafe. It just says it’s prior salvage so the consumer can go out and check these things online,” Jasinski said.

Under the proposal, the car Marissa Cartwright was driving – without airbags – would not have gotten a clean title.

“So, Minnesotans will know if they’re one of those vehicles that has been a prior salvage vehicle – which is important to me as a parent, buying a car for my daughter,” Jasinski said.

If it gets final approval, the new law will take effect next year – in January 2023. Until then, the Minnesota loophole remains. So, used car buyers need to beware.

“You could buy a vehicle with a clean title, and it could have a history that you don’t know about,” Voss warned.

No safety inspections

Sen. Jasinski also warns that Minnesota law does not require safety inspections before rebuilt wrecks are put back on the road.

“The state does not do that,” he said. Although existing law requires some newer model used cars to have an inspection, those only look to see if stolen parts were used to make repairs.

The goal is to combat auto theft – not assure safety.

Credit: KARE 11
Even though its airbag was deployed - and the car was 'totaled' - it was being sold with a clear title.

“So, that’s somewhat of a misnomer – that it’s a safety inspection. It is not,” Jasinski explained.

That means it’s up to automobile rebuilders – and ultimately used car buyers – to determine whether a car is roadworthy.

How to protect yourself

If you are considering buying a used car, most experts recommend you take three steps.

First, test drive the car.

Second, check the vehicle history. The National Insurance Crime Bureau has a free website called VINCheck – where you can enter a vehicle’s identification number and determine if it has been declared salvage by any of its participating insurance companies. For a small fee, companies like CARFAX offer much more detailed histories. In addition to flagging salvage cars, CARFAX reports provide a wide range of information including accident histories, service histories, previous odometer readings, open recalls and the number of prior owners.

Third, take the car to a trusted mechanic for an independent inspection. It might drive fine one day, but a trained mechanic may be able to spot problems – including prior flood damage – that may cause problems down the road.

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