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Flash rusting and corrosion undercutting of water‐thinned paint films on iron surfaces are caused by the electrochemical decomposition of that steel surface. Flash rusting is that rust‐coloured spotting which occurs as the iron is solubilized and bleeds through that water‐thinned paint film. The steel simply corrodes because of the flow of electric currents that occur as the pure iron reverts to its more stable compounds: ferric hydroxide, hydrated ferric oxides and ferric oxides. This paper reviews the chemistry of flash rusting and corrosion undercutting and reports on the successful applications of modified barium metaborate in providing both initial and long‐term corrosion resistance for water‐thinned paints on steel. Several physical factors that contribute to flash rusting and corrosion undercutting are also discussed.