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October 8, 2008

Implementation of National Motor Vehicle Title Information System Ordered

     On September 29, 2008, in Public Citizen v. Mukasey, Judge Marilyn H. Patel of the U.S. District Court for the Northern District of California ordered the Justice Department to implement the National Motor Vehicle Title Information System, which was enacted into law in 1992. This national database is supposed to gather information from insurance carriers and junk and salvage yards about vehicles written off by insurance companies due to accidents, fires, floods, and the like, thereby helping to prevent consumers from being defrauded by unwittingly purchasing vehicles that have been previously deemed total losses.

     According to Judge Patel’s order, January 30, 2009 is the deadline for the Attorney General to publish final policies and procedures in the Federal Register, as well as to provide a database that is accessible to consumers. The information gathered must include the validity of a vehicle’s title; whether the vehicle is titled in a particular state; whether the vehicle has been junked or salvaged; and an odometer mileage disclosure. In addition, the Attorney General has to establish a monthly reporting system for insurance companies and junk and salvage yards by March 31, 2009.

     Consumer advocates clalim that this database has not been created because the insurance industry has been putting pressure on the federal government to delay implementation of the law.

     Judge Patel’s ruling is a victory for all car buyers, but the database isn't fail-safe. State laws regarding re-titling vehicles as "total losses," vary considerably. In other words, a vehicle that might be considered a total loss in one state might not be in another. This can lead to the practice of "title washing," whereby vehicles are transported from a strict state to a more lenient state in order to obtain a clean title.

     A total loss database is long overdue, but measures should be taken to ensure its integrity. Similarly, a national lemon buyback database should be initiated, so that consumers who buy used cars can get reliable information about whether or not the car they are considering has been repurchased by the manufacturer as a "lemon." 

This post was provided by Sergei Lemberg, an attorney specializing in auto fraud and lemon law.

October 8, 2008 | Permalink

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