According to CARFAX, cutting corners with paperwork or failing to bring vehicles up to U.S. specifications can change imported vehicles from gray market to downright shady. Moving vehicles across international borders is an ideal way for the unscrupulous to push vehicles with questionable histories.

As most dealers know, a gray market vehicle starts its life and is meant to stay in a country outside the U.S. Naturally, given the proximity of these borders and terms of NAFTA, the most prevalent gray market vehicles in the U.S. originate and have been operated in Mexico and Canada.

“Gray market vehicles are not, in and of themselves, illegal,” says CARFAX director of market research Jay Markwood. “However, importing these vehicles without following proper procedures, filing the correct paperwork, and making proper adjustments to bring the vehicles up to U.S. specifications is illegal.” This is happening more often thanks to advantageous exchange rates and ease of movement between countries, according to Markwood.

Importing vehicles is an easy way for individual sellers to defraud honest auto dealers by illegally moving cars to the U.S. and reselling them to unsuspecting dealers to cash in on higher market values. But there’s a bigger concern than paying too much for a gray market vehicle. “Unfortunately, we’ve learned that some scammers move vehicles to the U.S. to hide questionable past lives such as salvage, rebuilt or junk titles, which can affect not just resale value but the safety of the vehicles,” he adds.

In addition to these types of damaged vehicles, CARFAX says dealers need to be leery of potentially stolen vehicles. The National Insurance Crime Bureau [NICB] warned in a news release earlier this year that vehicle theft, which is up for the first time in a decade, is especially prevalent in border areas. Vehicle cloning by car thieves crossing borders, utilizing the gray market channels, is a lucrative way for these thieves to traffic stolen vehicles while passing them off as legitimate imports.

Keep illegal gray market cars off your lot by:

• Using a vehicle history service like CARFAX, which flags gray market vehicles in their reports. Even if the car hasn’t been branded a gray market vehicle, the details section of CARFAX Vehicle History Reports can provide clues such as:

• Title or registration information from outside the U.S.

• Designations in the history details like: “Vehicle inspected; found to meet U.S. highway safety specifications.”

• Accident or damage reports from outside the U.S.

• Examining the vehicle – particularly the door or doorjamb for import notations.

• Checking to see whether the odometer/speedometer are set as miles or kilometers.

• Looking for liens. Vehicles imported from another country may still have liens on them in that country of origin. Without research, an unsuspecting dealer could get taken.