A different breed of curbstoner, and yet another way cities leak revenues. www.stopcurbstoning.com If there’s such a thing as a profile of a typical curbstoner, it’s someone who buys cars cheap, cleans them up, and flips them for a profit to unsuspecting consumers under the pretense of being a private party. But recently, we’ve become aware of an entirely different type of curbstoner – and curbstoning. These are rogue tow truck operators who buy junked or non-running vehicles and resell them, either whole or in parts. “CASH PAID FOR ANY VEHICLE RUNNING OR NOT” You may have seen listings like that one on free classified ad websites, or posted on telephone poles or community bulletin boards. Sometimes, it’s from a salvage yard that needs to boost its inventory or a scrap yard looking to make a legitimate profit through recycling. But often, it’s from one of these rogue tow truck operators. Here’s how they work. They buy basically junk cars for $200-$300 apiece. If the car runs, they fix it up enough to sell it to an unsuspecting buyer, typically doubling or tripling their money as a curbstoner with little effort. They don’t take title to the vehicle, so there’s no paper trail associating them with the junker. Instead, the title jumps directly from the previous owner to the buyer, hence the term “title jumping.” Title jumping is illegal. But, because there’s no direct paper trail, enforcement is difficult when buyers don’t insist on conducting business with the registered owner of the vehicle. But what if the vehicle doesn’t run? That’s when things get interesting, and every bit as profitable. First, easily removed parts are listed for sale online. Such resalable parts may include wheels, headlights, taillights, emblems and trim, and even the glass and seats. With the rise of online classified ads, those parts easily find willing cash buyers on the used parts market. After the saleable parts are salvaged and sold, what’s left is recycled as scrap metal. For instance, if it doesn’t find a buyer as an intact used part, a used catalytic converter can bring $40-$80 or more as scrap, depending on the converter, the market, and the price of unrecovered platinum. Aluminum wheels are worth $10-$15 per wheel as scrap, even if damaged and unusable as wheels. The radiator and wiring harness may contain scrap copper worth $10-$30. What’s left is simply sold for scrap at about $300 per ton. With an average of a ton and a half of scrap per vehicle, that’s $450. But what if the vehicle doesn’t run? That’s when things get interesting, and every bit as profitable. Once again, the perpetrator doubles or triples his or her money, most of it in cash, with no trace of any transaction taking place. And, a busy rogue tow truck operator could easily flip hundreds of vehicles per year. If an operator averaged only one car a day at $250 per car in profit, that adds up to $91,250 in under-the-table income every year. Many flip – and make – much more. In most cities, auto parts salvage and resale are regulated businesses, requiring licensing and, in some areas, additional inspections and permits. So these parts curbstoners, like regular curbstoners, generate unlicensed, largely untaxed business profits while taking sales from legitimate local businesses. 1 www.stopcurbstoning.com Changes for the Good This era of unmonitored vehicle salvage transactions is slowly coming to an end, but it is far from over. Most states require used auto parts sellers to have vehicle salvage and reseller licenses. Licensed auto salvage yards are required to report all vehicle purchases – and the identities of the sellers – to a division of the U.S. Department of Justice though a system called NMVTIS – the National Motor Vehicle Title Information System. Theoretically, this system should provide an end-to-end record of every salvaged motor vehicle, including identities of owners and dates of purchase and sale. The system is designed to protect consumers from fraud and unsafe vehicles, and prevent stolen vehicles from being resold. When utilized, the system works – the state of Arizona has enjoyed a 99% recovery rate on stolen vehicles since NMVTIS began. However, as yet, not every state is fully participating in NMVTIS, and it is unclear how vigilant the U.S. Department of Justice and National Highway Transportation Safety Administration (NHTSA) has been in monitoring and prosecuting these infractions. Despite the threat of a $1,000 fine for each failure to report vehicle information, some salvage operations are still failing to report transactions. Recovering Revenue by Crunching Data and Catching Crooks When they buy non-running cars, licensed salvage yards must report the identities of the sellers to NMVTIS. These names and addresses could be cross-referenced against business license information and taxes paid to identify individuals running illegal parts and salvage businesses, and subsequently recover funds owed to the public. In addition, parts curbstoners even more than regular curbstoners must advertise their wares. That turns free classified ad listings into powerful investigative tools. In an informal spot-check using Craigslist listings in three U.S, cities, we turned up several possible “hits.” First, we used the site’s search feature to look for the phrases “cash for cars” or “buy cars.” We opened the most-promising listing and cut-and-pasted the phone number from that listing into the site search engine. Very often, we found the same phone number used in listings offering vehicles and vehicle parts for sale, usually listed “by owner.” Cross-referencing NMVTIS data and monitoring free online classified sites can pay big dividends for municipalities in revenue generation, community enhancement, and public safety. By taking action, cities: ■ ■ ■ ■ Eliminate curbstoning by rogue tow truck operators and illegal auto salvage businesses Protect consumers from unsafe vehicles and substandard parts Protect the environment from unregulated vehicle salvage operations Protect local businesses from unlicensed, unregulated, untaxed competition ■ Preserve neighborhoods from “pop-up” auto salvage businesses ■ Recapture revenues lost to vehicle and vehicle salvage fraud Licensed vehicle salvage operators can do their part to protect their businesses by complying with NMVTIS reporting requirements – free reporting tools are available. For more information, visit http://www.nmvtis.gov/nmvtis_auto.html. Finally, consumers can be vigilant when they see vehicles for sale at prices well below market value. As Craigslist warns auto shoppers: “If a deal sounds too good to be true, it probably is!” Stop Curbstoning! Please help us About Stop Curbstoning Stop Curbstoning is a cause supported by a group of concerned corporations and organizations within the automotive industry. Its mission is to educate used car buyers, unite car dealers, and motivate municipalities to take action against this growing problem. Stop Curbstoning was founded by AutoTec, LLC, a privately held company based in Birmingham, AL. AutoTec’s flagship product, AuctionACCESS, is the automotive remarketing industry standard for managing dealer access to wholesale auto auctions. 2