FAIRFAX, VA – In prepared remarks submitted for the record to the Senate Committee on Commerce, Science & Transportation, the Automotive Recyclers Association (ARA) has outlined the growing national problem of vehicle title fraud, and the subsequent need for Congress to pass legislation requiring the insurance industry to report essential total loss information to a national Vehicle Identification Number (VIN) database.
During the Senate Committee oversight hearing on the property and casualty insurance industry, senators’ questions centered on the insurance industry's performance following the 2005 hurricanes. Sen. Trent Lott urged the Congress to pass his bill S. 545 that requires automobile insurers to provide consumers access to data on total loss vehicles and the reason for the determination of total loss.
"I want to thank the automotive industry for bringing the issue of title fraud to the table," said Lott. "I lost my two-year Cadillac Escalade to flood damage from Katrina. The vehicle looked absolutely great on the outside, but when I opened the door, water rushed out and the car would no longer crank. I really wonder where this vehicle is today."
Millions of motor vehicles are “totaled” by insurance companies annually, and many of these vehicles routinely re-enter the stream of commerce in the used car market. An estimated half million vehicles were damaged by Katrina, and there is evidence that these cars are being cleaned up and sold to unsuspecting consumers. Many of these cars are unsafe and should not be on the roads. Yet, consumers are overpaying for these vehicles which they believe are sound.
“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 K. Eliades, ARA Chief Executive Officer. “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.”
ARA supports the establishment of a publicly accessible database that provides consumers themselves with valuable information that currently is only available to insurance companies and transportation officials, along with language restricting the export of multiple vehicles under one VIN. S.545 is a positive step towards addressing this problem.
“Empowering consumers with a publicly accessible electronic database of total loss VIN’s not only increases consumer protection, but will deter fraud by chipping away at the underground market auto supply,” said Eliades. “We look forward to Congressional debate on this bill to stop vehicle title fraud and help law enforcement crack down on criminals who alter titles on totaled vehicles.”