August 2013
Consumer Line
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INDUSTRY NEWS

IBC Makes Available Database of Canadian Flood Cars


In the last edition of Consumer Line OMVIC warned consumers that the recent flooding in Ontario and Alberta would result in flood damaged vehicles finding their way back into the marketplace. Recently, other key players have repeated the warning and have made available tools and information to protect consumers.

The Insurance Bureau of Canada (IBC) has “compiled a database of flooded vehicles that have been reported and branded as non-repairable due to flooding across southern Alberta and the Greater Toronto Area”. Access to the database is free and it is searchable by a vehicle’s VIN (vehicle information number). The VIN for most vehicles can be found on the upper driver’s side dashboard (viewable through the windshield) or on the driver’s door pillar.

According to Rick Dubin, Vice-President of Investigative Services at IBC, "In the aftermath of a flooding event, fraudsters may attempt to cleanup and resell storm-damaged vehicles to unsuspecting consumers. This new free VIN Verify Service on ibc.ca helps to protect consumers by allowing them to check whether a vehicle has been reported as flood damaged and non-repairable by participating IBC member insurance companies".

Consumers can access the IBC database here.


HAVE YOU HEARD?

Nearly Quarter Million Flood Cars on US Roads


Carfax, a US based vehicle history report company, recently released a research report that shows "more than 212,000 cars that were branded as flood damage by a state Department of Motor Vehicles (DMV) are on U.S. roads right now". According to Larry Gamache, Carfax Director of Communications, "Our research proves that flood damaged cars are everywhere. It's big business for professional con men to quickly clean up and resell these cars miles from where the flooding occurred. Consumers need to look out for flooded cars no matter where they live. They're a serious danger to anyone who unknowingly buys one."

This rampant availability of US flood-damaged vehicles demonstrates the dangers Ontarians face when shopping for a vehicle south of the border. According to OMVIC Manager of Communications Terry O’Keefe, “the US does not have mandatory branding in all states. This means it’s possible for an unscrupulous individual to buy a flood write-off that has been branded as such, transfer the ownership to a state without branding, and the flood or salvage brand disappears. It’s a practice referred to as title washing and unsuspecting or uneducated consumers can easily fall victim to this deception”.

While title washing may remove a salvage or flood brand from a vehicle’s ownership, often this information is still available on vehicle history reports such as Carfax and CarProof (a Canadian based vehicle history report company). Like the IBC, both of these companies have made available free searches for flood-damaged vehicles; the Carfax search is available here; and the CarProof here.


CONSUMER PROTECTION

Ontario’s Branding Program


Ontario has had a mandatory vehicle branding program since March 31, 2003. According to the Ministry of Transportation (MTO) insurance companies, auto recyclers, salvagers, auctioneers, dealers and individual vehicle owners must assign a brand type to vehicles that have been damaged to the point of total loss. These vehicles must be reported to the MTO and the brand is then recorded in the Ministry of Transportation's Vehicle Registration System.

The four types of brand are:

  • "Irreparable" - written off as a total loss; can never be driven on the road again
  • "Salvage" - written off as a total loss; can be repaired or used for parts; cannot be licensed until repairs are inspected and brand is changed
  • “Rebuilt" - previous “Salvage” vehicle - has been repaired and undergone two inspections; can now be licensed and driven
  • "None" – has not been given one of the other three brands; may have been branded outside Ontario but MTO is not aware; may have been damaged/rebuilt prior to March 31, 2003; may have been damaged but was not written-off; may never have been involved in a collision

Brand-Rebuilt

It is important consumers understand when they buy from a registered dealer in Ontario they are protected from being sold a ‘flood car’. By law, Ontario dealers must disclose:

  • if a vehicle has been branded or declared a total loss
  • if a vehicle “sustained any damage caused by immersion in liquid that has penetrated to the level of at least the interior floorboards”
  • if a vehicle has been registered in another jurisdiction, and if so, where
  • any material fact that might influence a reasonable purchaser

More information on the MTO’s mandatory branding program is available here.


EXTRAS
- Auto Talk
Definitions

The following definitions are provided to better help consumers understand terms that are commonly used in the auto industry:

All-in Price Advertising: refers to advertising the total price of a vehicle; in other words, the drive-away price. By law, dealers who advertise the price of a vehicle must ensure the price includes all charges and fees the customer is expected to pay. This includes freight, pre-delivery expense/inspection, safety certification, e-testing, administration fees and the fees for any products or services the dealer has pre-installed on the vehicle. Taxes (and licensing) do not have to be included in the advertised price so long as the advertisement clearly and prominently states they are not included.

Rescission: the cancellation of a contract. In some circumstances, cancellation of a contract can occur if the dealer does not disclose specified information.

Disclosure: Ontario dealers are required to clearly inform customers about specified facts or details (including all material facts) related to the past-use, history and condition of vehicles offered for sale or lease. All disclosures must be written on the contract in language that is clear, comprehensible and prominent.

Material Fact: any fact about a vehicle’s history, performance, or quality that might influence a reasonable purchaser’s decision to buy a vehicle or to determine a fair price for the vehicle.

Be sure to check out the next Consumer Line for terms related to extended warranties!


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OMVIC is the self-management organization of the motor vehicle dealer industry and administers the Motor Vehicle Dealers Act -- a public protection statute -- on behalf of the Ministry of Consumer Services. OMVIC's mandate is to maintain a fair and informed marketplace by ensuring registration of motor vehicle dealers and salespeople, regularly inspecting all of Ontario's 8,800 dealerships, maintaining a complaint line for consumers and conducting investigations. OMVIC also administers the Motor Vehicle Dealers Compensation Fund.