Tennessee Consumers Must Be Wary of Hurricane-Related Price Gouging, Scams

Attorney General Slatery, TDCI Warn Consumers
Friday, September 13, 2019 | 10:54am

NASHVILLE – In the wake of Hurricane Dorian’s recent landfall in North Carolina, Tennessee Attorney General Herbert H. Slatery III and the Tennessee Department of Commerce & Insurance (TDCI) are urging Tennessee consumers to be alert to potential price gouging, charity scams, and the sale of water-damaged vehicles.

“While most Tennesseans show the ‘Volunteer spirit’ by helping their friends and neighbors recover after a natural disaster, some unscrupulous individuals use the occasion of a tragedy to better themselves at others’ expense,” said TDCI Interim Commissioner Carter Lawrence. “We’re reminding Tennesseans to be wary of possible Hurricane Dorian scams in the weeks and months ahead and always report any suspicious or illegal activity immediately to law enforcement authorities.”

Tennessee’s unfair or deceptive acts or practices statute makes it illegal to “unreasonably [raise] prices or unreasonably [restrict] supplies of essential goods, commodities or services in direct response to . . . a natural disaster”, even if the event occurs out-of-state. Penalties for violations of the act are up to $1,000 per violation, and the Attorney General may also seek injunctions, consumer restitution, or other appropriate remedies.

If you suspect that you were a victim of price gouging, look for sudden dramatic increases in prices for necessities right before, during, or after a natural disaster and keep a record of your transaction. You can file a complaint at www.tn.gov/consumer or call toll-free at 1-800-342-8385.

After a disaster, some scammers attempt to solicit donations for victims while pocketing the money themselves.

"Unfortunately, following natural disasters some bad actors see an opportunity to take advantage of well-meaning and generous donors,” said General Slatery. “Our Office will go after those who violate state law. We also want Tennesseans to be wary of illegitimate groups, take time to know who will receive the donations, and get all of your questions answered before sending money.”

Research the charity online to see if it is legitimate. See if it is ever described as a scam or listed on a scam tracker website.

Contact the Tennessee Secretary of State’s Division of Charitable Solicitations to determine whether the entity is registered as a charitable solicitor. Go to http://sos.tn.gov/charitable or call 615-741-2555.

If you are solicited by telephone, ask if the caller works for a professional fund-raiser. Tennessee law requires this disclosure. Ask any solicitor who contacts you how your contribution will be spent. For example, what portion of your contribution would go to salaries and administrative costs?

After a flood or a natural disaster like a hurricane, it is a common practice for owners of flood-damaged vehicles that have been declared total losses by insurance companies to be allowed to retain damaged vehicles. Instead of sending the flooded car to the junkyard, however, scammers will attempt to sell their flooded vehicles quickly, hoping to stay ahead of computer system updates so that title check systems don’t have time to detect a car’s history. By the time a consumer discovers the vehicle’s history, the seller will be long gone.

The Motor Vehicle Anti-Theft Act of 1996 makes a clear distinction between a “freshwater flood” vehicle (which can be rebuilt) and a “saltwater damaged” vehicle (which cannot be rebuilt). Tennessee titling laws, administered by the Tennessee Department of Revenue, distinguish between “non-repairable” and “salvage” vehicles by the type and extent of the damage. (The determination about the type and extent of damage is made by the insurance company.)

To help consumers avoid inadvertently purchasing a flood-damaged vehicle, the Tennessee Motor Vehicle Commission urges consumers to remember:

Prior to the sale of a flood vehicle, any person selling a flood vehicle is required by law to disclose such history to the purchaser. Further, once titling that vehicle, the purchaser will receive a branded vehicle title indicating the vehicle’s salvage history. Having such a title will substantially impact the value of that vehicle for further resale.

Keep in mind that there are lawful ways of reselling previously damaged vehicles. “Salvaged vehicles” can be repaired and sold as “Rebuilt vehicles” so long as they comply with the applicable laws. The Tennessee Motor Vehicle Commission requires that licensed dealers provide a disclosure of the vehicle’s history as previously been a “Salvaged vehicle” on a Commission approved form.

Anyone attempting to purchase a vehicle in the near future should be on the lookout for indicators of a flood vehicle, such as a musty smell, damp carpets, or mud/silt under the seats, and should attempt to find the vehicle history prior to purchasing.

Use a reputable title check service, such as the National Motor Vehicle Title Information System, to check the vehicle history. If you find that it was last titled in a flood-damaged area, you should ask a lot of questions before making a decision. Keep in mind that title check companies are only as good as the information that they collect from other sources. Some of the sources that they collect data from may be delayed in pushing their data to the system.

Remember that a vehicle’s flood history may take up to 30 days or longer to post on traditional consumer reporting sites. As such, the Commission recommends that individuals purchase motor vehicles from a licensed motor vehicle dealer, which they can verify at https://verify.tn.gov/.

Because the vehicle could appear to be in very good shape, even if it has significant electrical and corrosion issues, it’s important to always have a trusted mechanic inspect a vehicle before purchasing it.

Recreational and powersport-type vehicles might be damaged by flooding, too. Look for the signs of flooding and saltwater damage before purchasing these units, too.

If you suspect a licensed dealer* has sold you a vehicle with a salvage history and failed to disclose it, you may file a complaint here.

The Commission is not responsible for collecting or enforcing any refunds from unscrupulous sales but may take disciplinary action resulting in potential civil penalties or suspension or revocation of a dealer’s license. Visit the Tennessee Motor Vehicle Commission online or by calling 615-741-2711.