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"Title jumping" refers to a practice used by unlicensed car dealers to hide their business from the authorities, both to avoid paying taxes and to avoid complying with consumer protection regulations. Buying a car with a jump title puts you at risk of fraud — and possibly even physical harm.
Dealer Licensing
In general, auto dealers have to be licensed by the state where they operate. You dont have to be a dealer to sell an occasional vehicle on your own, but most states have rules on how many vehicles you can sell in a year before youre considered a dealer and must be licensed. The state can tell whos selling cars, and how many, by tracking transfers of motor vehicle titles.
Jump Titles
An unlicensed dealer who wants to avoid detection by the state will buy a car from one person and then sell it to another without putting his name on the title in the interim, as is required by law. The title therefore "jumps" from the original owner to the new owner, as if the car was sold directly rather than through the dealer. If the title to your car shows the previous owner as someone besides the party you bought it from, you may have a jump title, also called a jumped title or a floated title.
Dangers to Buyers
States license auto dealers to protect the public from shady tactics such as odometer fraud — turning back the odometer to make it appear that the car has fewer miles on it. According to the Wisconsin Department of Transportation, unlicensed dealers are more likely to sell unsafe cars, to lie about the condition of a vehicle or how it was used, and to sell cars and then disappear when something goes wrong with the vehicle.
