Beware of fallout from ‘flipping’ vehicles, says Stop Curbstoning

The retail used-car industry has a dislike of “curbstoning” -- the practice of “flipping” large numbers of used vehicles by unlicensed sellers.

It’s understandable. Curbstoners hurt legitimate dealers who play and pay by the rules.

But dealers aren’t the only victims. A case study of one alleged curbstoner by Stop Curbstoning, a group of corporations and organizations within the auto industry, shows that the practice hurts unsuspecting customers and cash-strapped municipalities, too.

Stop Curbstoning was founded by AutoTec, a Birmingham, Ala., company that helps the wholesale industry identify licensed vehicle dealers. The National Automobile Dealers Association, the National Auto Auction Association and the National Independent Automobile Dealers Association are among the groups supporting this effort to halt this automotive fraud.

According to the California Department of Motor Vehicles’ Web site, one curbstoner attracted the state’s attention after numerous consumers complained of having trouble registering vehicles they purchased from him. Many were rebuilt wrecks.

Phony auto repair businesses and falsified documents enabled him and others to purchase 1,200 vehicles valued at over $2.8 million at local auctions, the state says.

Stop Curbstoning did the math and found that the cities in which the alleged curbstoner operated lost $56,000 in sales tax revenue, and the state of California forfeited $168,000.

The vehicles, the state says, were sold at unlicensed lots operated on streets and vacant lots. Many were salvage vehicles, and titles and registrations were falsified.

Chuck Redden, president of AutoTec, says Stop Curbstoning next year will urge dealers to put a link on their Web sites that consumers can click to learn more about curbstoning and how to avoid falling victim to the practice.

“It would be naive to say there is only one guy doing this and he’s in California,” says Redden. “Every state has this problem.”