FBI Busts Car-Cloning Ring

By Joe Overby, Staff Writer
March 25, 2009

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TAMPA, Fla. — The Federal Bureau of Investigation cracked down on a 20-year, international "car- cloning" operation Tuesday as federal indictments were issued for 17 people in Florida, Chicago and Mexico for allegedly selling stolen vehicles with "cloned" VINs to unsuspecting consumers.

One of the auto industry groups that lent a hand in such fraud-prevention efforts as "Operation Duel Identity" is Carfax, which said it has partnered with more than 2,000 law-enforcement agencies by offering extensive title and registration information through its database.

"We were one of the first to recognize VIN cloning as a problem for dealers and consumers and have pioneered efforts to identify this fraud in our reports," Larry Gamache, Carfax's communications director, told Auto Remarketing on Tuesday.

And as federal investigators discovered, having the kind of detailed information that Carfax provides can be crucial, because this type of fraud can have serious implications across the board on dealers and consumers.

For instance, this particular car-cloning operation was spread throughout 20 states and multiple countries and cost consumers, auto insurance companies and other victims $25 million, according to the FBI. More than 1,000 cloned cars were sold, the agency added.

A car-cloning scheme — like this Tampa-based one FBI agents busted — typically starts with a stolen vehicle, often a luxury car or fully loaded SUV.

Then, the stolen unit's VIN is ripped off and replaced with a legitimate number from a similar model from a different state, officials noted. And after the addition of phony ownership documents, the cloned vehicle is then resold to an unsuspecting consumer. This then can leave the actual owner of the vehicle with the correct VIN in danger of being held liable.

"If you buy a cloned vehicle and its true pedigree is discovered, the car will be confiscated, and you'll still be responsible for any outstanding loans," FBI officials explained. "If your vehicle is the victim of car cloning, you could be accused of a variety of offenses, from parking tickets or cutting somebody off in traffic, to serious criminal activity like organized crime.

"And you could spend a great deal of time and money trying to prove that it wasn't you or your car after all," they added.

But there are steps being taken to prevent these crimes down the road. The Department of Justice, for example, has developed the National Motor Vehicle Title Information System, which is an electronic system connecting state DMVs with one another.

Basically, NMVTIS is designed to prevent a vehicle titled in one state from having its VIN stolen and used on another unit in a different state.

"The database will spit out a hit showing the number is already in use," the FBI explained.

The system is currently being used or in the process of starting up in 37 states. A recent law, however, mandates that it is operational in all 50 states by next year.

Moreover, Carfax has stepped up its efforts to assist agencies like the FBI in stopping and preventing car cloning.

"Carfax is part of the solution that will help dealers avoid these vehicles and build confidence with their customers," Gamache continued. "We work tirelessly to expand our database so we can help our customers uncover problems like VIN cloning."

According to Gamache, every U.S. and Canadian motor vehicle department sends title and registration data to Carfax, which keeps the information in its database permanently.

The company also urges dealers to run a Carfax Vehicle History Report before they purchase any vehicle. Gamache stressed that dealers should pay careful attention to where and when every unit was registered.

"In addition, closely examine the title, service receipts and other documents to make sure the names and vehicle identification numbers all match," he pointed out.

For more information, visit www.fbi.gov or www.carfax.com.

Used Car Manager