[Congressional Record Volume 144, Number 112 (Monday, August 31, 1998)]
[Senate]
[Pages S9678-S9680]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       THE NATIONAL SALVAGE MOTOR VEHICLE CONSUMER PROTECTION ACT

  Mr. LOTT. Madam President, today I would like to share a few details 
about S. 852, the National Salvage Motor Vehicle Consumer Protection 
Act. As you

[[Page S9679]]

are well aware, Senator Ford and I co-authored and introduced S. 852 to 
protect the hundreds of thousands of American consumers who fall prey 
to unscrupulous auto rebuilders who conceal damage information from 
prospective car buyers. Equally important are the millions of us who 
share the roads with previously totaled automobiles and trucks sold as 
undamaged vehicles. This type of fraud is a national travesty that puts 
America's motorists and passengers in great peril. It can and must be 
stopped by this Congress.
  S. 852 is the right vehicle for Congressional action. It is a 
balanced consumer protection bill that has received significant support 
in the United States Senate. In fact, 54 of our colleagues from both 
sides of the aisle are cosponsors of S. 852. They recognize that the 
only individuals who stand to lose from this legislation are the chop 
shop owners and other charlatans who victimize our nation's drivers by 
selling them what is tantamount to ``garbage on wheels.''
  The time has come to eliminate the practice of vehicle title 
laundering, a scam that costs American consumers and the auto industry 
more than $4 billion each year. And, there are plenty of horror stories 
where individuals have been injured or killed in a wreck involving a 
structurally unsafe vehicle that was sold to the unsuspecting victims 
as undamaged. Every year more than one-half of the 2.5 million totaled 
vehicles are rebuilt and placed back on our nation's roads and 
highways. As a result of titling loopholes, crooks and con artists are 
able to sell many of these vehicles without disclosing the vehicles' 
damage histories. In some states, as many as seventy percent of all 
totaled vehicles are sold to unsuspecting buyers with ``clean titles.'' 
Clearly, the status quo is not working. There are 2.5 million reasons 
why S. 852 is needed now.
  While most states do require some type of disclosure on a vehicle's 
title to indicate its history, the fact remains that titling 
requirements vary from state to state. The existing hodgepodge of state 
laws allows unscrupulous rebuilders to profit from inconsistent state 
titling procedures. Even when a vehicle has been totaled, swindlers are 
able to ``wash'' the titles so they bear no indication of the vehicle's 
structural damage. This is achieved by simply retitling a severely 
damaged vehicle in another state so the car or truck's damage history 
will not appear on the vehicle's new title. S. 852 would help eliminate 
this type of fraud by requiring accurate information about a vehicle's 
damage history to be branded on a title, and subsequent titles, for the 
life of the vehicle.
  Let me say it clearly. S. 852 is an anti-fraud, anti-criminal, pro-
consumer piece of legislation. I would also like to point out that 
while S. 852 establishes a much needed uniform standard to protect 
America's motorists, it does not create a federal mandate. Instead, the 
bill establishes a uniform baseline. States are free, as they should 
be, to adopt more stringent disclosure requirements or to choose not to 
participate at all. Even so, I believe the minimum disclosure 
requirements contained in S. 852 will go a long way toward protecting 
used car buyers, automobile dealers, insurance companies and policy 
holders, consumer advocacy groups, salvage dealers, and everyone who 
travels on our nation's roads.
  This legislation applies to seven model years of vehicles. Those 
vehicles with a pre-accident value of more than $7,500, regardless of 
their age, would also be subjected to the bill's branding requirements. 
I am also pleased to report that Senator Gorton and I recently reached 
an agreement with state attorneys general, after extensive discussion 
and negotiation, which authorizes states to cover any vehicle, 
regardless of age. Consequently, concerns raised about certain vehicles 
being excluded have been adequately addressed.
  The bill contains a number of provisions designed to better inform 
consumers of a vehicle's damage history. Cars and trucks classified as 
``totaled'' by insurance companies would be identified as ``salvage'' 
by state motor vehicle departments. Since totaled cars and trucks are 
the primary source of vehicles that rebuilders use in their operations, 
S. 852 provides assurance that virtually all of these vehicles titles 
will be ``branded'' with this important information. Participating 
states are also required to ``carry forward'' any brands carried on the 
title from other states. This approach will dramatically limit the 
ability of deceitful rebuilders to ``wash'' titles and defraud 
consumers. Vehicles not covered by S. 852 are those that are repaired 
under the bill's seventy-five percent damage threshold that are 
returned to their owners. And, of course, if a state desires, it may 
provide disclosure for buyers of these vehicles or for vehicles with 
that have sustained damage of less than seventy-five percent of its 
pre-accident damage. Thus a state like Minnesota, which requires 
disclosure when a vehicle has sustained damage to the extent of seventy 
percent of its pre-accident value, is free to adopt the uniform 
definitions and procedures in S. 852 and still maintain its seventy 
percent disclosure requirement. Again, this bill is about ensuring 
disclosure to consumers. It is not about limiting state actions.
  S. 852 also ensures that if a salvage vehicle is rebuilt, it will 
undergo a theft inspection, as well as any state required safety 
inspection. A branded ``rebuilt salvage vehicle'' title must be 
obtained before the vehicle can be driven on the road and state 
inspector must affix a permanent sticker on the vehicle's door jamb, as 
well as a window sticker, specifying that it has been rebuilt, and 
whether it passed a safety inspection.
  Since state law, not federal law, traditionally provides for causes 
of action and consumer remedies, S. 852 specifically provides that the 
bill would in no way affect actions or remedies available under state 
law. It has never been asserted that consumer remedies in any state are 
inadequate to protect their citizens. Instead, as a supplement to state 
law remedies, a provision was recently added to the bill that allows 
state attorneys general to sue on behalf of citizens who are victimized 
by rebuilt salvage fraud and to recover monetary judgments for damages 
they may have suffered.
  It is important to reiterate that S. 852 will not force states to 
weaken or otherwise cut back on their disclosure standards. Instead, 
the adoption of a minimum threshold will significantly enhance consumer 
protections and lead to safer roads and highways everywhere. Under S. 
852, state legislatures are given the freedom to decide whether they 
want to change their laws in any way or maintain their current program. 
If a state decides to adopt the bill's uniform definitions and 
procedures, but also wants to disclose additional information about a 
vehicle's damage history to its residents, S. 852 gives the state ample 
flexibility to do so.
  Congress started down this road six years ago with the passage of the 
Anti-Car Theft Act of 1992. The Act directed the Secretary of 
Transportation to establish a task force to study problems associated 
with motor vehicle titling, and more importantly, the specific problems 
that have contributed to this serious and costly titling fraud. The 
statute required ``an examination of the extent to which the absence of 
uniformity and integration of state laws regulating vehicle titling and 
registration and salvage of used vehicles allows enterprising criminals 
to find the weakest link to `wash' the stolen character of the 
vehicles.''
  This was an important charge entrusted to a very qualified group of 
individuals with significant knowledge and experience in motor vehicle 
titling procedures. The task force included representatives from a wide 
range of backgrounds including federal transportation officials; 
federal, state, and local law enforcement officials; state motor 
vehicle officials; motor vehicle manufacturers, dealers, and recyclers; 
salvage yard operators and scrap processors; insurers; and others.
  After approximately eight months of deliberation, the task force 
concluded that the lack of uniformity in state laws is the primary 
reason that unscrupulous rebuilders are able to ``wash'' vehicle titles 
with relative ease. What's more, the task force recommended a seventy-
five percent damage threshold before a vehicle would be branded as 
``salvage.'' By including the seventy-five percent threshold in our 
latest draft of the bill, Senator Ford and I simply followed the task 
force's recommendations, which were based on careful and thorough 
consideration of this issue for all affected parties.

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  While the vast majority of people in the auto salvage business are 
honest, hard-working individuals, a group of dishonest rebuilders are 
continuing to tarnish the salvage vehicle industry. It is this latter 
group that Congress must put out of business. Far too many people are 
falling victim to the scam of passing off rebuilt totaled vehicles as 
undamaged. The loopholes that allow this deceptive practice to continue 
must be closed now. Only cheats and crooks that prey on the innocent 
will benefit from any lack of action during this Congress.
  While not a perfect solution, S. 852 is a significant step in the 
right direction. It represents a fair balance between the need to 
establish uniform procedures for disclosing information to consumers 
about a vehicle's damage history and the need to preserve states' right 
to determine what is in the best interest of their citizens.
  S. 852 will stem the tide of motor vehicle titling fraud, protect 
consumers and automobile dealers, and reduce the number of injuries and 
fatalities on America's roads and highways. I urge my colleagues to 
give S. 852 their full support.

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