A new federal system, the National Motor Vehicle Title Information System, took effect last January 1 after 17 years.
This new policy compels junkyards, auto insurance institutions and all states to report motorized vehicles that are either severely damaged that they were written off, or if the vehicles were stolen. Before customers purchase a used vehicle, they will be given a chance to check the system database.
This system, which is purposed on providing protection for clients from purchasing rebuilt wrecks, was implemented 17 years after enactment of the law requiring it.
Public Citizen, a consumer advocacy group, legal counsel Deepak Gupta, said that this system will have a “profound effect” on automobile safety and car purchasing procedures in general.
According to a 2001 study from the Department of Justice, 2.5 million vehicles or cars are junked annually; 1.5 million of these vehicles are fixed and are re-used on the road. This study also anticipated that a national tracking system would prevent losses due to fraud from an estimated $4 billion to $11.3 billion annually.
Federal officials say that full compliance will effectively protect customers from auto fraud and prevent unscrupulous individuals from using state-to-state title transfers claiming the vehicle to have a “washed” title, regardless of its history as a “salvaged” vehicle.
However, some states have not yet participated in this system. Illinois officials, for instance, claim that this program is not absolutely necessary since auto customers can easily retrieve information though commercial services such as Experian AutoCheck or Carfax. The other states are the District of Columbia, Oregon, Mississippi, and Kansas.
Nathan Maddox, Senior legal adviser to the Secretary of Illinois State, expressed that the state feels that this private sector is already sufficient and that they are already capable of providing the information required by this new system.
The exclusion of Illinois, as well as other four states, will hurt the program, according to Consumers for Auto Reliability and Safety (CARS).
The initiative of consumer groups Public Citizen, Consumer Actions and CARS was largely responsible for the establishment of this new system. A law in 1992 called for the establishment of a system, but it took these three consumers groups to make a federal case out of it which eventually proved to be fruitful.
The same consumer groups, in 2008, sued the government saying that consumers’ rights are endangered unless this 1992 law is established. A San Francisco federal district judge conceded to the collective lawsuit and a series of deadlines were given to the Department of Justice.