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Electronic Reporting of Purchases Reduces VEHICLE FRAUD

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 By Jay Svendsen

Accurate reporting and tracking of a vehicle’s title history is now an accepted method of reducing and eliminating opportunities for vehicle fraud. Several jurisdictions have adopted laws requiring reporting within a specific time frame, sometimes as soon as 24 or 48 hours of purchase. While these requirements are typically aimed at the junk/salvage/insurance industries, reporting requirements may be considered for dealers and tow/wrecker operators in the future.

Other jurisdictions

Other jurisdictions including Alabama, South Carolina, and North Carolina have enhanced requirements for businesses to report prior to a purchase. These states also allow vehicles to be purchased without a title as long as it was manufactured prior to a certain year and its value is less than a specified amount (typically less than $1,000). This pre-purchase reporting allows those vehicles to be run through a system to check whether they have been reported stolen prior to the transaction occurring. If it is reported stolen, they can refuse the seller, and if not reported stolen, can continue with their purchase. These same businesses are required to report their purchase to NMVTIS separately ensuring that the transaction history is made available to all states and consumers.

Since 2012, the Georgia Department of Revenue requires auto recyclers and secondary metal recyclers to report their purchases to a state system within 48 hours of purchase. The business must determine if the vehicle is going to be scrapped/sold for parts or possibly rebuilt. Then they advise the Department whether they wish to cancel the title or not. As a benefit to reporting into the state system, the jurisdiction reports these vehicles to NMVTIS on behalf of the business.

A  single report

The Georgia model allows a business to do a single report and complete both their state and federal reporting requirements. The state and the NMVTIS database are updated making the information available to all entities needing access to the data.

Tennessee’s model, which has been in place since 2016, is similar but requires reporting within 24 hours of purchase and that a stolen check is performed each evening for up to 30 days after the initial report. Using this model, any vehicle found to be stolen can be recovered. If the reporting entity collected and reported all of the required information and followed reporting procedures, they avoid being subject to 'possession of stolen goods’ issues.

Through each of these states’ programs, jurisdictions see between 9,000 to 15,000 vehicles reported every month. They can use the data to update their state records accordingly, greatly reducing the possibility of the VIN and its associated paperwork being used for malicious activities. In states where stolen checks are performed, the actual stolen rates are very low, generally between .15% to .25%. However, because of the volumes of vehicles involved; this can mean identifying 15 to 35 stolen vehicles each month in each state.

Using NMVTIS as a reference

By using NMVTIS as a reference, these states can see what has happened to a VIN before they perform any title transactions. Unfortunately, VIN cloning and other vehicle frauds are common but reporting of VINs puts them on the ‘map.’ Accurate and timely reporting reduces thousands of VINs from being tampered with, protecting consumers, businesses, and jurisdictions alike.

imilar laws as referenced above have passed in Arizona, but new reporting procedures have not yet been implemented. Nebraska is also considering changes to its law this year. Throughout the country both industry and government are working together to find efficient, cost-effective reporting processes that will boost the value and accuracy of the NMVTIS system.

From an operational standpoint, the programs in Alabama, South Carolina, and North Carolina are state run and the jurisdiction is responsible for updating its records and NMVTIS.  However, the jurisdiction can't update NMVTIS through its feed unless it becomes an official NMVTIS Data Consolidator. So, in these states the industry member must report to both the jurisdiction and NMVTIS separately.

Third party DOJ approved data consolidator

Conversely, the programs in Georgia and Tennessee are operated by a third party, Auto Data Direct, Inc., which is a Department of Justice approved NMVTIS data consolidator. The state pays a flat monthly fee of $5,000 for the data collection or $7,000 per month for data collection and the stolen check processing. There is no limit on the number of records reported or the number of businesses participating. The third-party consolidator handles all data collection, customer service, data feeds to the state as desired, daily updates to NMVTIS, and maintenance of the service. In this model, businesses can use system tools to make reporting easier. Through a single report, all of their reporting requirements are met.  Because reporting requirements throughout the country are similar; businesses that operate in multiple jurisdictions don't have unique processes for each state which would be very burdensome.

Combining state and national

Combining state and national reporting functions can help thousands of vehicles in transition from dropping off the radar while businesses comply with more time-consuming processes. By reporting vehicles to the state, the vehicles are placed and classified in the NMVTIS system making them visible to law enforcement and titling agencies. Using the information provided in NMVITS, jurisdictions can improve the accuracy of their records and process titles with more confidence.

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Jay Svendsen is the National sales manager for Auto Data Direct Inc. ADD (as it is commonly called) is one of the three approved data consolidators for reporting to the national NMVTIS data-base. Jay has been at most of the industry shows since the start of NMVTIS and tries to help explain the new NMVTIS reporting requirements, changes in the laws, and what must be reported. ADD was the only data consolidator that was fully operational from the start date, has recently become the sole consolidator for the state of GA, and works actively with the industry, software providers, and associations trying to make meeting the reporting requirement as easy as possible for the parties affected. ADD continues to add services that help the recyclers do their day to day jobs. Jay continues travel throughout the country to explain the present status of NMVTIS reporting and how reporting to NMVTIS will benefit recyclers in the future. When Jay isn't traveling for ADD he spends his time fishing, boating , brewing beer, or playing in his garden.

Mike French