Texas AG Wins Refunds for Residents who Unknowingly Purchased Damaged Vehicles

Texas Attorney General Greg Abbott on Monday signed a settlement that ensures refunds totaling up to $10 million to Texans who unknowingly purchased vehicles that were previously damaged and deemed total losses by State Farm Mutual Automobile Insurance Co.

The company, which voluntarily notified Abbott and other state attorneys general of the problem, reportedly failed to identify – or “brand” – the titles of some vehicles that had been salvaged or damaged when it received the titles from the original owners, as required by law. The vehicles were then sold to new owners, who may have been unaware the vehicles had been totaled by State Farm because the titles were not branded properly. Such sales occurred as far back as June 1997.

“This is an unfortunate situation, but I am pleased the company has come forward to correct its error,” said Abbott. “Texans who unknowingly purchased one of these previously damaged vehicles will be notified in writing and will be offered an amount by State Farm that approximately covers their loss – that is, the loss of vehicle value that resulted from an incorrectly branded title. Consumers can either accept the amount offered or pursue their own claims.”

Texas joined seven other states – California, Florida, Illinois, Iowa, Nebraska, New York and South Carolina – in spearheading the settlement, which totals $40 million nationwide.

Texans will likely account for an estimated 25 percent of vehicle owners affected by the agreement, and can expect compensation ranging from $400 to $20,000, depending on the current average retail value of their vehicles and the total number of claims.

According to the settlement, State Farm will track vehicle identification numbers of damaged vehicles sold in this manner and will notify the owners their titles may be faulty. Interested consumers can then file with the claims administrator for the compensation offered.

The claims process will occur over the next several months, as State Farm works with motor vehicle departments in the various states to obtain the necessary title information. Refunds will be issued after the claims process is completed.