At more than $20,000, the used Jeep Cherokee didn't come cheap. But it had a truckload of options and less than 12,000 miles on the odometer, so Warren Hill thought he was getting a fair shake when he bought the 1991 vehicle from a used-car dealer in 1992.
He was wrong.When Hill, an employee at the National Arboretum, went to trade in his Jeep two years later, another car dealer told him something surprising: The vehicle had previously been in a major accident. Hidden behind the white paint and beige interior were a damaged frame, body parts of unmatched colors and a $6,000 repair job riddled with missing welds.
"We don't want it; it's worthless," Hill remembers the dealer saying.
Experiences like this are behind a move on Capitol Hill to crack down on the sale of salvaged cars to unsuspecting buyers. Like Hill's, some were crashed and repaired. Others were damaged by floods or other natural disasters.
The House approved a bill last fall to warn buyers when a car has been repaired after suffering major damage. The Senate is expected to do the same in the next few weeks, all in the name of protecting consumers.
Consumer groups don't like the bill; nor do 38 state attorneys general. They accuse Congress of supporting legislation that would actually exempt most used cars from the proposed rules, a potential boon to auto dealers and insurers.
Iowa Attorney General Tom Miller said the legislation "is being sold as a pro-consumer bill, but this bill is a wolf in sheep's clothing."
Currently, there is no national standard for reselling salvaged cars. States have an array of regulations, ranging from no rules to strict ones such as Iowa's. Used cars there must be declared "salvaged" if they had repairs costing more than 50 percent of their value before being damaged.
The differing rules allow unscrupulous sellers to move from state to state, re-registering damaged cars in lenient states. The attorneys general estimate the sales have cost consumers and other unsuspecting buyers $4 billion in inflated sticker prices.
A bill sponsored by Senate Majority Leader Trent Lott, R-Miss., would require states to put a designation on the titles of vehicles that have been salvaged. Similar to the measure passed by the House, it also would require placement of a decal on the vehicles and outlaw false statements about a vehicle's history.Lott's bill now has 47 co-sponsors.
But the measure does not apply to all vehicles. Damaged cars would have to be less than seven years old to qualify for a "salvage label." Cars older than that would need to be worth more than $7,500 to get branded. The vehicles then would have to have been declared totaled by an insurance company or undergone repairs worth more than 80 percent of their value before being damaged.
Critics say those restrictions would exempt most used cars. The average car on the road is 8.5 years old, according to the Consumer Federation of America. At the same time, the 80 percent threshold would let some substantially rebuilt vehicles avoid being labeled "salvaged," say critics, who favor a 65 percent threshold.
State Farm Insurance Cos., the nation's largest underwriter of automobile policies, said it supports the 80 percent figure because cars with more damage are typically declared a total loss and scrapped. It views the age limit as a way of preventing unfair labeling for older cars, since a relatively minor accident could push them over the damage threshold.