Answer
The primary failure mode is Stress Corrosion Cracking (SCC) or simple oxidation leading to pitting. Carbon steel (SAE 1070-1090) is highly susceptible to rust in the presence of moisture. Pitting acts as a severe stress concentrator ($K_t$). Because wave springs operate at high stress levels (often 30-50% of tensile strength), a pit can quickly transition into a fatigue crack. Once a crack initiates, the reduced cross-sectional area leads to rapid propagation until the spring snaps. To prevent this, carbon steel springs are typically finished with Zinc Phosphate (oil dipped) or Vapor Degreased and coated with an anti-corrosion oil.