A Wreck of a Bill
Senate Majority Leader Trent Lott (R-Miss.) is sponsoring a bill that is advertised as a consumer protection from unscrupulous car sellers who take wrecked vehicles and fix them up for sale. In fact, the bill would significantly erode consumer protections in many states, including California. Lott’s folly could result in more college-age, low-income and minority buyers being snookered into purchasing salvaged vehicles that may be affordable but unsafe.
Salvage fraud is among the biggest consumer problems facing buyers of used vehicles. The nonprofit advocacy group Consumers for Auto Reliability and Safety reports that about 2.5 million vehicles a year nationwide are declared a total loss and become “salvage.” About a million of those are patched together and eventually resold, even though they may be structurally unsound. These frauds are estimated by consumer groups to cost buyers and the auto industry about $4 billion a year.
States have established their own laws to define salvaged vehicles. In California, for example, any vehicle so damaged that it is too costly for the owner, leasing company, lender or insurer to repair is required to be issued a title as a salvage vehicle if it is registered with the state; that title designation serves as a clear warning to a potential buyer.
In 1994, the National Assn. of Attorneys General called for Congress to develop national legislation to deal with the problem. Consumer groups pressed for the same. But Lott’s bill only masquerades as consumer protection. The measure would set a ceiling, rather than a floor, for consumer protection. Under its provisions, state standards for what constitutes a salvage vehicle could not be higher--though California’s already is. Cars older than six model years would be exempt. There would be no criminal or civil remedies. The bill would only allow refunds, $2,000 in civil penalties and some injunctive relief.
Plainly the bill would result in a setback. That’s why consumer groups and attorneys general in 38 states (oddly, not including California) are opposed to the measure, which is backed by car dealers and insurance companies. Wisely, Sen. Barbara Boxer has said she won’t support the bill in its current form, and Sen. Dianne Feinstein is studying it. The Senate should not be duped by this legislation.
