Car cloning can victimize Those Buying Cars After Bankruptcy

You have been tempted by the e-mail (we all have, at least for a second) to cash a comma laden check for a desperate soon-to-be-millionaire in Tanzania and you have probably clicked on the search engine pop-up promising to make you $10,000 per month from home for only five minutes worth of work per week. Basically, when the economy slows down, scam artists kick it into high gear.

Now, amidst the hubbub of the federal government's Cash for Clunkers program, which will eventually flood the market with more used cars, the number of stolen cars being resold through legitimate dealers is on the rise. Car theft rackets across the country employ "car cloning" tactics to disguise the true history of a stolen vehicle.

The problem is that to a person who paid nothing for a vehicle, the amount for which it sells is nothing but gravy. This means that they have the ability to sell "nice" cars for little money and do so by targeting folks in financial trouble or those who may be trying to rebuild after a bankruptcy.

We work hard through this blog to stress the importance of limiting the use of credit after a bankruptcy. Paying for things outright is always best for your finances but it also gives you a sense of accomplishment. However, that can all be for naught if the the $5,000 you have been saving for a car gets put toward one that has been stolen and cloned. What makes cloning so dangerous is that it's very difficult to prove.

Car cloning is done by making fake vehicle identification number (VIN) plates, based on legitimately owned cars and trucks, and placing them over or in place of the stolen vehicle's actual VIN. Using the forged VIN, thieves can produce legitimate documentation to create a fictionalized history on the car.

Recently, more than 20 people were convicted of such a practice in Georgia. Federal officials said the group made millions selling stolen vehicles across the southeast. In South Florida earlier this year, authorities shut down a car cloning ring that sold more than 1,000 cars across the country and in foreign countries. The losses to insurance companies, individual owners and dealers was estimated at more than $25 million.

Whenever this kind of money is involved with a crime operation, you can rest assured it will not go away easily.

Carfax estimates that nearly 225,000 of the 1.5 million vehicles stolen each year end up with VINs from legally owned vehicles. Should you happen to purchase a vehicle that has been cloned and its discovered, it can be repossessed. And here is another great reason for paying cash: if you borrowed to buy the cloned car, you can still owe on the loan. If you pay cash you are still out quite a bit of money but at least you won't be reminded of it every month.

Hopes are high in the government that come next year, car cloning will be nearly impossible thanks to the creation of the National Motor Vehicle Title Information System. This is a branch of the Department of Justice that will maintain a nationwide database of vehicles that will connect every state's department of motor vehicles to the federal government.

The bottom line is that when you find yourself in vulnerable financial situations, you need to be constantly prepared to protect yourself. Remember that if something sounds too good to be true, it is. That may sound like cliche advice but it's simply the best way to measure the legitimacy of a "great deal." Be smart out there.