How Do Flood-Damaged Cars Get on the Road?

Part 2: "The Lookout" team talks to industry experts and insurance companies to find out.
7:31 | 07/31/13

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Transcript for How Do Flood-Damaged Cars Get on the Road?
Two days emerged in the salty flood waters of superstores sandy mechanics tell us that spirit the truck is -- -- drive. I would need to drive struck out here who want to get back to the guy who sold it to us for twenty times more than a -- -- is -- -- Motorola flatbed excuse me could cover as the. And -- takes feared for a ride back to salesman Jack. It's back there and hasn't come out to take a look at the damage she found. I remember Jack thinks I'm just until -- Little changes when I show him some -- video of a familiar. CD CT -- yeah and then she's my camera crew recognizes. -- -- That's huge selling that gentleman over there that destructive -- in the flood. And he wasn't allowed to -- -- for a test drive. It was the best part. Is the by resale will be honest with you guys. Why -- you how did you get cut to sell this truck. Look I -- it's corroding from the inside. You know the -- you know air -- can pop that thing on the highway don't by the U. When you sold this when you told her it's just didn't -- she does a lot of mean and others other good cars on the slot. I have no -- Well now we want some -- That is against the here's me auction sheet that shows it it was a blood. We thought we see in the last -- Jack when he comes back out holding of all things. These salvage agreement your memory and even if it was -- it's not salvage agreement. Plus says if you want you need one you can have big businesses are right so you -- acknowledging that vehicle was -- -- correct maybe forgot that we recorded. Hire purchase. An advantage the average car buyer does not enjoy. I am tired and I -- this car is not a citizen clean -- Italians yeah -- don't need. But yeah. Then Jack it -- calls the cops but they seemed mystified -- to. Good call yeah. This whole lot of other cars begin pulling up their grim faced drivers heading into the -- offices just run away. We later learned there investigators. From the New Jersey -- review commission which we've been talking to. And that there are suspending. Negation of did he later emailed us a statement saying they sincerely regret -- unfortunate misrepresentation. Of spirits. And since his independent action is in no way reflective of our typical business practices. Jack has been fire. -- this story is about much more than just won't use car -- because it is purchases. May never happen if insurance company USAA. Had done what New Jersey authorities say should happen in these cases could see when they pay off Mike's claim. USAA became spiritual wholeness and accordingly authorities. All owners must register -- view -- spirit as a salvage Carter branding its title this damaged goods would ever selling an auction. For USA didn't do that. They claim -- clean title somehow got lost and rather than ask for a new one. It's only auction house to sell the truck for parts of only plus somehow. -- -- ended -- Bundy and he's live for sale in one piece -- failure to obtain a salvage title is illegal in most states. Thanks in part of the work of I was used car watchdog of the other big insurers have paid millions in settlements. For not branding -- -- cars properly and -- what's known in the industry as. -- -- Are the most egregious offenders when it comes the title skipping weave through all a look at used car dealers and what about insurance companies now they do it some. They do is -- Because there's money to be made -- I don't understand from now there's no no no appeals -- -- really wanted to talk to USA about all this but they refused our request for an on camera interview. And central new enjoyed tow truck driving so much -- slows fears onto another flatbed. Go to and the San Antonio conceivably get someone to come out and check. Well we had a few follow up question -- So I'm here I'm actually. Right outside. USA headquarters. About the pull up to the main garden gate -- -- a tow truck called dragon slayer. -- can't miss it. So hopefully. He'll get this -- come out and have a chat with us hope to see you soon. All right let's -- -- -- -- My name's Bill Weir I'm -- ABC news and we're here to see you were back here Hersh. -- -- -- -- -- -- After getting voice mail all morning once you're -- the -- the spokesperson calls right back by Rebecca how are you. Yeah I know but sometimes I can be persuasive you've got to see this tow truck we have to bring that struck down here to show you it's got dragons on -- it's awesome -- love it come come check it out and chat with me. You know these are kind of important questions. She blames the auction company we're spear was sold for dropping the ball saying USAA pays an auction house to do the job for them. USA is says you know at this isn't our problem this was the auction -- -- -- -- the IRS comes to you and -- you owe us money -- and you say awful. Why pay Joseph do my taxes -- it was supposed to pay -- do you think an -- after Joseph yeah. After you. -- are you kidding a very small part to play in this story. It is your legal responsibility to brand this title. That's that it -- backing you shirk that responsibility. It soon becomes obvious that she's never coming out. About an hour or so later a new statement -- the email inbox. We are taking additional steps to ensure better safeguards in our contractors practices. So the total vehicles are properly labeled it says. And later and they teamed up with the auction house senate joint statement saying. Quote it was never our intent that this vehicle be offered as anything other than -- whole lost parts only sale. And finally they added this incident highlights there may be a need for more stringent controls. To protect consumers. So what can you do to protect yourself. -- -- experts encourage you to do your home check the car's history best you can. Haven't inspected by a mechanic you trust so your hands don't shake when -- -- that money from Honolulu. This -- spirit blessed she isn't a salvage yard in San Antonio tonight one less -- car on the road. Her story ends. --

This transcript has been automatically generated and may not be 100% accurate.

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