Measure on Salvage Cars Too Weak, Activists Say
Greg Hill, a salesman in San Francisco, was delighted when he purchased a Porsche 911 in 1996--until he discovered that the car had been totaled by its previous owner.
In a suit against the dealer who sold him the car, Hill alleges he was never told about the vehicle’s history and that he eventually had to shell out more than $5,000 for repairs to the car.
An estimated 1.5 million vehicles that are wrecked in accidents are recycled each year into the used car market, many of them sold to unsuspecting consumers who have no idea that they are buying a salvage vehicle.
Such consumers are defrauded of $4 billion every year, victims of an interstate junk car network that puts unsafe vehicles back onto the road when they should have a one-way ticket to the junkyard.
It would seem like an area ripe for a new consumer protection law, something that would ensure that used car buyers are made aware they are buying a car that has been totaled by an insurance adjuster.
In fact, Congress is preparing to pass a new law on these salvage vehicles. But consumer advocates are howling in protest, saying federal lawmakers have sold out to big-money campaign contributors who want a weak law.
“Unquestionably, this new federal law would undermine state laws that are better,” says Bernard Brown, an attorney in Kansas City, Mo., who has become a leading expert on auto title fraud.
The proposed federal law would require that a vehicle title be “branded” as salvage after the car is totaled by an insurance company. But the proposed law exempts cars older than six years and it requires branding only if the damage exceeds 80% of a vehicle’s value--a standard far looser than most automobile insurance companies follow.
By contrast, Iowa has a law that requires titles to be branded if damage exceeds 50% of a vehicle’s value. And the vast majority of states make no exemption on older cars. The new federal law also exempts motorcycles, trucks and recreational vehicles.
As a result of such weaknesses, a number of state attorneys general have lobbied against the bill, as has the Consumer Federation of America and the California Consumers for Auto Reliability and Safety.
Rosemary Shahan, president of the California consumer group, charges that most support for the legislation comes from dealership groups that want weak federal regulation of the used car market and have contributed heavily to key politicians.
Dealer groups and Republican leaders in Congress support the law, saying they believe the nation needs uniform standards against title fraud. They point out that states can opt out of the federal system if they choose.
The new title legislation is close to passage. The House has passed the bill and the Senate Commerce Committee has passed an identical version. It is due to reach the Senate floor early in the new year.
* Ralph Vartabedian cannot answer mail personally but will attempt to respond in this column to automotive questions of general interest. Do not telephone. Write to Your Wheels, 1875 I St. N.W. #1100, Washington, DC 20006 or e-mail to Ralph.Vartabedian@latimes.com.
