Flooding has devasted many areas of the United States over thepast few years, creating enormous damage to properties andthousands of vehicles.

Flood-damaged vehicles offer a tempting opportunity forcriminals to defraud unsuspecting consumers.

Carfax research recently revealedAmericans are driving more than a quarter-million flood damagedcars. Carfax estimates that more than 50 percent ofwater-damaged cars get resold.

Fraud involving used vehicles damaged by storm flooding thatlater appear in used car lots and auction sales is common,according to the Insurance Information Institute.

In some states, vehicles that have been flooded bear the words“salvage only” on their titles, usually after damage to the vehiclehas reached about 75 percent of its value.

Howerver, if the vehicle’s owner doesn’t have comprehensiveinsurance coverage at the time, or the repair bill didn’t exceed acertain amount, the vehicle might not get a ‘salvage’ or brandedtitle at all.

Title washing

Unscrupulous sellers may also switch or clone manufacturers’ serialnumber plates and put them on a flooded vehicle that has beenrepaired. They may also resell a car that has a salvage title in astate that has more lax title standards. This practice is called“title washing.”

In recent years, some states in the hurricane-prone parts of theUnited States have adopted rules that require that the words “floodvehicle” be included on the titles of vehicles that have been waterdamaged and rebuilt. Before such a vehicle can be sold, the buyermust be notified in writing of the vehicle’s past flood damage.However, if another state doesn't have such strict laws, it canbecome a dumping ground for undeclared flooded vehicles.

Related: Beware of flood-damaged vehicles resold as in goodcondition, warns NICB

Here's important information and tips for insurance agents andtheir clients to avoid being victimized by flood vehicle fraud:

Residents survey the flood water on Old Jefferson Highway atBayou Manchac in Prairieville, La., on Aug. 16. (Photo:MaxBecherer/AP Photo)

'Flood vehicle' definition

By definition, a flood vehicle has been completely or partiallysubmerged in water to the extent that its body, engine,transmission or other mechanical component parts have been damaged.If the vehicle is so damaged that it is no longer operable, thedriver's insurance company settles the claim by buying the vehicleand selling it as a “salvage” at an auto auction, according to theNational InsuranceCrime Bureau.

After the hurricanes of 2005, the NICB created a database inwhich vehicle identification numbers and boat hull identificationnumbers from flooded vehicles and boats are stored and madeavailable to law enforcers, state fraud bureaus, insurers and statedepartments of motor vehicles. The database (VINcheck) is online and can be accessed by thegeneral public.

Another attempt to solve the problem of title washing is theNational Motor Vehicle Title Information System, adatabase that requires junk and salvage yard operators andinsurance companies to file monthly reports on vehicles declaredtotal losses. The program operates under the auspices of the U.S.Department of Justice and is administered by the AmericanAssociation of Motor Vehicle Administrators.

Related: 6 tips for flood survivors on avoiding fraud andother scams

A car is partially buried in mud on Interstate 15 in Moapa,Nev., on Sept. 8, 2014. (Photo: John Locher/AP Photo)

Hiding flood damage

Dishonest car dealers buy water-damaged vehicles, dry and cleanthem, yet leave plenty of hidden flood damage. They then transportthe vehicles to states unaffected by the storm or natural disasterand sell them as used vehicles to unsuspecting buyers.

Flood damage can ruin a vehicle in any number of ways, fromeating away the electronics wiring to seizing up mechanicalsystems, and the damage may not reveal itself for months or evenyears. Corrosion and rust often eat away at the vehicle's metal andcomponents from the inside out, according to AutoTrader.

Recent 2016 data from Carfax suggests that morethan 271,000 cars reported as flood damaged by a state’s Departmentof Motor Vehicles, insurance companies and others, are back in use.It’s a nearly 30 percent increase from 2013.

In this April 18 file photo, a stranded vehicle is towed outof a flooded street in Houston. (Photo: Pat Sullivan/APPhoto)

Know the signs of vehicle flood damage

• Water stains and mildew mean the vehicle may have gone for aswim.
• A musty odor in the interior, which can sometimes be coveredwith a strong air-freshener.
• Upholstery or carpeting which is loose, new, stained or doesn’tmatch. Brand-new carpets in an older vehicle can be an importantred flag.
• Damp carpets.
• Rust around doors, under the dashboard, on the pedals or insidethe hood and trunk latches.
• Mud or silt in the glove compartment or under the seats.
• Brittle wires under the dashboard.
• Fog or moisture beads in the interior lights, exterior lightsor instrument panel.

Related: How insurance agents can counsel clientsafter a flood

A sedan sits underwater along Shaw Street in Drew, Miss., onMarch 11 as floodwaters have affected areas in theDelta. (Photo: Rogelio V. Solis/AP Photo)

Checklist for evaluating a vehicle for flood damage

• Turn on the ignition and check all instrument panel lightsilluminate.
• Test the interior and exterior lights, air conditioning,windshield wipers, radio, turn signals and heater repeatedly.
• Check the seat-mounting screws to see if there is anyevidence that they have been removed. To dry the carpetseffectively, the seats must be removed and possibly evenreplaced.
• Look at the heads of any unpainted, exposed screws underthe dashboard. Unpainted metal in flood cars will show signs ofrust.
• Check if the rubber drain plugs under the car and on thebottom of doors look as if they have been removed recently. It mayhave been done to drain floodwater.
• Check inside the seatbelt retractors by pulling the seatbeltall the way out and inspect for moisture, mildew or grime.
• Check door speakers as they will often be damaged because offlooding.
• Check aluminum and alloys for a white powder and pitting.
• Under the hood, check the engine oil by pulling the dipstick.When oil mixes with even a small amount of water it becomes murky,like a melted chocolate milkshake.
• Inspect the paper air filter. If the filter shows signs ofwater stains you will want to keep looking for anothervehicle.
• Don’t forget to check the trunk. Take out the spare tire andcheck for moisture or sitting water.
• Take a lengthy test drive. A part of your test driveshould include testing the vehicle’s electrical systems, as theyare prone to water damage.

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    • When you start the car, do you notice any smoke or oddsmells?
    • Listen for irregular noises, such as strained warningbuzzers.
    • Try every accessory to see if it works properly, including turnsignals, windshield wipers, headlight switches and high beams
    • Turn on the vehicle's entertainment system and listen to theaudio.
• Get the car checked thoroughly by a trusted mechanic.
• Carfax offers a free flood damagecheck, in addition to its for-pay vehicle history reports.
• Trust your instincts: If you don’t like the answers or the dealsounds too good to be true, walk away.

A person paddles through a flooded neighborhood on April 19in Spring, Texas. Storms dumped more than a foot of rain in theHouston area, flooding dozens of neighborhoods. (Photo: David J.Phillip/AP Photo)

10 states that have the most previously flooded vehicles in2016

1. Texas (43,000).

2. Pennsylvania (20,000).

3. Florida (17,000).

4. Kentucky (14,000).

5. Illinois (13,000).

6. South Carolina (11,000).

7. Michigan (11,000).

8. New Jersey (10,000).

9. New York (9,000).

10. Louisiana (9,000).

(Source: Carfax)

Related: The aftermath: Louisiana insurance agents assistclients while dealing with own losses

In this May 29, 2015, file photo, cars sit in floodwatersalong Interstate 45 after heavy overnight rain flooded parts of thehighway in Houston. (Photo: David J. Phillip/APPhoto)

Top 10 cities with flooded cars in 2016

1. Houston (19,314).

2. New York (15,722).

3. Philadelphia (11,998).

4. Dallas/Fort Worth (9,896).

5. Chicago (9,524).

6. Miami/Fort Lauderdale (8,407).

7. Detroit (7,156).

8. Minneapolis/St. Paul (6,332).

9. Boston (4,283).

10. Pittsburgh (3,751).

(Source: Carfax)

Cars sit submerged in flood waters on Tallapoosa Street onDec. 25, 2015, in Birmingham, Ala. (Photo: Butch Dill/APPhoto)

Additional fraud prevention tips

• Buy only from a reputable dealer/seller.
• Ask good questions. Specifically inquire if the vehicle wasever damaged in a flood. Whatever the answer, get it inwriting with the bill of sale if you buy the car.
• Ask to see the vehicle's title. If you think the vehiclewas damaged in a flood and the title is not stamped "salvage" or"flood," ask for the car's history to see if it came from a statethat recently experienced flooding.

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