The Society of Collision Repair Specialists (SCRS) is supporting two bills that could change the way vehicle total losses are recorded and disclosed to the public. The bills, originally introduced last year, were proposed in the aftermath of Hurricane Katrina to prevent the fraudulent sale of flood-damaged cars. "The country has been in dire need of this type of legislation," says Dan Risley, executive director of the SCRS. "Protecting the consumer is the basis for both of these bills. Recent events, such as Hurricane Katrina, underscore this need as water- and flood-damaged vehicles that were declared total losses have been reportedly sold throughout the United States. Many of these vehicles were sold to unknowing consumers that were unaware the vehicles were total losses." The bills (S. 545 and H.R. 1029) call for the National Highway Safety Administration to require insurers and self-insurers to provide information relating to the fair market value and safety of damaged cars, particularly total loss vehicles. Under the proposed legislation, the public would have access to the vehicle identification number (VIN) and odometer reading, the date of and primary reason for the total loss determination, and whether the airbags deployed. The data would be made available electronically. SCRS joins the National Automobile Dealers Association (NADA) and the Automotive Service Association (ASA) in supporting the legislation. Although SCRS did not announce their support of the original bills last year, Risley said the SCRS board of directors did support them. "All too often an unsuspecting individual purchases a used car with a clean vehicle title that in actuality has been totaled, rebuilt and resold," says SCRS legislative committee chairman Rollie Benjamin. "The proposed legislation will make it significantly more difficult to perpetrate this dangerous misrepresentation by making it easier for consumers and dealers to identify those vehicles that have re-entered the market with a history of extensive damage." The original sponsor of the Senate bill, Minority Whip Trent Lott (R-Miss.) reintroduced the legislation (called the Consumer Access to Total Loss Vehicle Data Act) in February. This legislation directs the NHTSA to require insurance companies to publicly disclose the VIN, the date the vehicle is declared a total loss, and a statement explaining why the vehicle was declared a total loss. The vehicle data would be made available to consumers via the Internet, e-mail and information databases such as Carfax. "A number of these cars are unsafe and shouldn't be on the roads. And folks are overpaying for vehicles they believe are mechanically sound," Lott says in a statement issued after he reintroduced the bill. "To the untrained eye, they appear in good shape. The disclosure my bill requires would allow anyone buying cars to easily identify a rebuilt wreck, even if the title is washed." Rep. Cliff Stearns (R.-Fla.) introduced the companion bill in the House, called the Damaged Vehicle Information Act. Both bills are designed to reduce opportunities for fraud made possible by inconsistent state laws. "Vehicles that may have sustained significant structural damage (and are subsequently declared a total loss) could be repaired and sold in a different state without any notification to the consumer," says Risley. "Unfortunately, in some states the title doesn't alert the consumer and there isn't a national database to check the vehicle identification number to see if the vehicle was ever declared a total loss." "Legitimate law-abiding automotive recyclers who provide positive environmental and consumer benefits are under attack by fraudulent actors who are manipulating the nation’s insurance system and state vehicle titling laws to obtain and sell dangerous total loss automotive salvage vehicles to unsuspecting consumers," says George Eliades, CEO of the Automotive Recyclers Association, testifying before the Senate Commerce Committee at an April 11 oversight hearing on the property and casualty insurance industry. "The fallout resulting from what are now being labeled as 'Katrina cars' provides a clear example of the reality of this fraudulent activity. As early as January 2006, Carfax discovered that scam artists had purchased numerous hurricane-flooded vehicles from the Gulf Coast, altered their titles and tried to sell them through a California auction yard." The ARA supports legislation "providing for the establishment of a publicly accessible VIN database, along with language restricting the export of multiple vehicles under one VIN in any related bill that is adopted." Last year, the Property Casualty Insurers Association of America (PCI) worked with ARA and the American Insurance Association to develop alternative legislation that would streamline the data collection and reporting aspects of the two bills. The insurance groups claim that building the total loss database would be unnecessarily costly to the industry. Supporters of the bill disagree, noting that insurance companies should have the bulk of this information already. "Insurance companies can and should do more to combat title fraud by disclosing the history of these substantially damaged vehicles and keep dangerous rebuilt wrecks off the road," says David Regan, vice president of legislative affairs for NADA, testifying at the April 11 hearing. "Consumers, law enforcement and independent repairers benefit from more public disclosure of these total loss vehicles," says Bob Redding, the ASA's Washington, D.C. representative. "The technology and information are available. Senator Lott's bill puts the information in the hands that need it in a timely manner." Although there are still some issues to be resolved within the language of the two bills (such as defining total loss), Risley said a complete VIN database would be an excellent first step to stamping out fraud. "While we realize these bills may not address all of the issue surrounding these vehicles, these bills would serve as the foundation and the basis of consumer protection if signed into law," Risley says. |
