Calif. Dealers Voice Opposition to Bill Changing History Reporting Standards

April 16, 2012 | SACRAMENTO, Calif.
By Sarah Rubenoff
A new California bill signed this past summer — Assembly Bill 1215 — which created changes for salvage vehicles that eventually make it onto a dealer’s retail lot may soon be altered, that is, if the proposed Senate Bill 990 goes through.

This legislation would allow the use of reports from commercial data providers, such as Carfax and AutoCheck, instead of just from the National Motor Vehicle Title Information System to satisfy current consumer protection laws regarding the sale of used cars.

This would go against part of what was recently passed with AB 1215, which stated that any franchised or independent store in California that tries to retail a salvage unit must place a special sticker on the window and include the report from the NMVTIS.

Gov. Jerry Brown signed the measure —   AB 1215 — after California legislators introduced it back on Feb. 18, 2011. The new law went into effect this past July.

And what purpose did AB 1215 serve?

At the time the bill was passed, The California  New Car Dealers Association explained, “California Assembly Bill 1215 will require all car dealers to run all used vehicles they sell through NMVTIS, a national database overseen the by U.S. Department of Justice, to make sure the vehicle is not stolen, salvaged, junked, flood-damaged or a Lemon Law buyback,” the association explained.

“Although not every state participates fully in NMVTIS, its database currently contains more than 87 percent of all vehicle title information nationwide — a percentage that will only increase as more DMVs come into compliance with the federal mandate,” it continued.

Consumer Groups Rally Opposition

But now, Senate Bill 990 has hit the docket. And some consumer groups are not pleased with this development.

The Consumer Federation of California announced its opposition late last week to the bill that is claims would “gut” last year’s AB 1215.

“The Consumer Federation of California announced its opposition today to Senate Bill 990 (Vargas), which would allow the use of reports from commercial data providers instead of from the National Motor Vehicle Title Information System to satisfy current consumer protection laws regarding the sale of used cars,” the CFC explained.

AB 1215 apparently had wide support from consumer groups; auto dealers and their trade associations, which represent both new- and used-car dealers; international law enforcement officials; non-profits that represent law enforcement officials from the United States, Canada and Mexico; as well as the former head of the FBI’s Auto Theft Task Force.

Further explaining the organization’s point of view, Richard Holober, executive director of the CFC, said, “SB 990 would undermine consumer protection in order to enhance the profits of a single out-of-state company.

“Carfax would undoubtedly benefit from this legislation, but it would be categorically unsafe for consumers,” he asserted.

The organization also expressed worry that the bill’s language would allow dealers to use any commercial database for vehicle history reports, “with no given standards for reputability or accuracy of data, and no repercussions for providing false or inaccurate information.”

Explaining their reasoning behind this claim, the CFC cited that private data providers are not subject to regulation like the NMVTIS is.

Dealer Reaction

And in perhaps some interesting news, dealers seems to be opposed to SB 990, as well.

In a letter from the California New Car Dealers Association to state Sen. Mark DeSaulnier — who is chairman of Senate Transportation & Housing Committee — the organization explained its opposition to the bill, as well as stressing its support for AB 1215 and what it means for the industry and consumers.

The California New Car Dealers Association is a statewide trade association that represents the interests of over 1,100 franchised new car and truck dealer members. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also engage in automotive service, repair and part sales.

The letter, sent this past March, stated,  “We (CNCDA members) are writing to express our opposition to SB 990, which would modify the first in the nation requirement that dealers post a notice on vehicles that have been identified by the National Motor Vehicle Title Information System (NMVTIS) as junk or salvage automobiles or as having title brands as adopted in AB 1215 (Blumenfield) of last year.

“As discussed below, with AB 1215 set to become operative in July and the barrier to entry in becoming a NMVTIS data provider negligible, we see no reason why the provisions of last year’s measure should be revisited in 2012,” it continued.

The letter then went on to highlight why the organization has chosen to take a stance against the bill, pulling from a couple of different points, ranging from the danger of weakening consumer protection to adversely affecting the state budget :

—“AB 1215 was painstakingly negotiated between consumers, dealers, legislative committees and other stakeholders. CNCDA actively participated in those negotiations and we will not ‘walk back’ on the deal that was struck last year. Plus, the provisions now contained in SB 990 were specifically rejected by this committee in 2011.”

—“Before AB 1215 can be implemented, SB 990 seeks to weaken its consumer protections. Hundreds of dealers are ramping up to comply with the new NMVTIS requirements in July yet this bill throwsinto doubt what the legal requirements will be this summer, or next January when SB 990 would take effect.”

—“SB 990 is poorly drafted with vague and ambiguous language. Under the bill, any private entity that provides ‘vehicle history’ information in all 50 states and Washington, D.C. qualifies as a ‘commercial data provider.’ However, there is no specificity as to what qualifications the private entity must have, no definition of ‘vehicle history’ (compared with ‘vehicle history report’ as specifically defined in federal law and AB 1215), nor what ‘obtains data’ includes — the bill lacks a minimum threshold for the type and volume of information needed for an entity to become a “commercial data provider.”

—“NMVTIS is the best database available for title information. While some third-party vehicle history providers include accident and repair information, only NMVTIS, by federal law, requires all insurance companies, DMVs, salvage and junk yards to report total loss and branding information. This database is, as the Legislature concluded last year, the best place to start in determining a vehicle’s title history.”

—“Repeal of the NMVTIS mandate will adversely affect the state budget. DMV will save hundreds of thousands of dollars after the passage of AB 1215 because increased California utilization of NMVTIS will help the DMV meet our participation requirements. SB 990 could eliminate those cost savings.”

—“Third-party providers can become NMVTIS providers at minimal cost. For as little as $6,000, Carfax or any other person who seeks NMVTIS information can become a vendor and in turn provide the information dealers need to comply with AB 1215. We see no reason why third party providers can’t meet this low threshold and provide this information to their current dealer customers and we have repeatedly asked Carfax to do so.”

To view more of the response to SB 990 from the CNCDA members, see the complete letter here.

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