[Congressional Record Volume 145, Number 46 (Tuesday, March 23, 1999)]
[Senate]
[Pages S3123-S3125]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself, Mr. Levin, and Mr. Bryan):
  S. 678. A bill to establish certain safeguards for the protection of 
purchasers in the sale of motor vehicles that are salvage or have been 
damaged, to require certain safeguards concerning the handling of 
salvage and nonrebuildable vehicles, to support the flow of important 
vehicle information to the National Motor Vehicle Title Information 
System, and for other purposes; to the Committee on Commerce, Science, 
and Transportation.


     salvaged and damaged motor vehicle information disclosure act

 Mrs. FEINSTEIN. Mr. President, today I am introducing 
legislation on behalf of myself and Senators Levin and Bryan that will 
offer consumers protection against unknowingly purchasing a vehicle 
that has been rebuilt after sustaining substantial damage in an 
accident.

  The sale of rebuilt vehicles that have been wrecked in accidents has 
become a major national problem. According to the National Association 
of Independent Insurers, about 2.5 million vehicles are involved in 
accidents so severe that they are declared a total loss. Yet, more than 
a million of these vehicles are rebuilt and put back on the road.
  In a report to the state Legislature, the California Department of 
Consumer Affairs found, with respect to California alone ``More than 
700,000 structurally damaged and 150,000 salvaged vehicles are returned 
to streets and highways every year without a safety inspection, and 
they pose a potential hazard to all of California's twenty million 
unsuspecting motorists.''
  In many cases, ``totaled'' cars are sold at auction, refurbished to 
conceal prior damage, then resold to consumers without disclosure of 
the previous condition of the car. The structural integrity of these 
vehicles has been so severely weakened that the potential for serious 
injury in an accident is greatly increased.
  In one case, a teenage who purchased a rebuilt wreck was rendered 
quadriplegic after an accident in which her vehicle rolled 360 degrees 
at about five miles an hour. The vehicle had been in a previous 
accident. It had been badly repaired and then resold without disclosure 
of its previous condition. The vehicle's roof was replaced after the 
first accident, but in the subsequent accident, the roof collapsed when 
the substandard welds failed.
  In another incident, a mother purchased a Honda Prelude for her 
daughter's high school graduation. Although only hail damage was 
reported at the time of sale, the car had actually been totaled in 
Texas and rebuilt in Arkansas. The repair shop acknowledged that they 
had spent only about $3,000 on repairs, despite an insurance company's 
estimate of over $10,000 worth of damage. The inadequate repair 
resulted in the collapse of the right front suspension inflicting a 
debilitating head injury on the driver.
  In yet another case of fraud, Jimmy Dolan bought a used Toyota from a 
dealership in Clovis, California. The odometer had only 19,000 miles on 
it and he was told the car was like new and in original condition. In 
fact, that was untrue. The previous owner had been involved in a 
serious accident that required $8,700 in repairs. After a series of 
problems with the car, the original owner took it back to the 
dealership and traded it in. The dealership then resold the car to 
Jimmy Dolan for almost $14,000.
  After only a minor accident, Mr. Dolan found out the truth about his 
car. He managed to trace the car back to the original owner who 
described the extent of the damage. Despite having full knowledge of 
the vehicle's history, the dealership refused to give Dolan a refund. 
Eventually, he had to file a civil lawsuit to recoup his losses.
  These are just three cases in which serious physical and financial 
losses were inflicted on innocent victims who unknowingly purchased a 
vehicles that had sustained major damage.
  The bill that I am introducing will address the problem of rebuilt 
wrecks by: providing nationwide written disclosure for every vehicle 
sale of previous salvage and major damage; providing widespread 
coverage for all vehicles including vehicles of any age or value, motor 
homes, pickups, and motorcycles; allowing states to maintain existing 
salvage laws; strengthening the Federal rebuilt vehicle database to 
promote instant access to vehicle accident histories for consumers, 
dealers, and law enforcement; requiring certification by a qualified 
repair facility of the proper repair of any salvage vehicle before it 
is returned to the road.
  This bill has been endorsed by the Attorneys General of California, 
Connecticut, Iowa, and Michigan. In a letter of support, Attorneys 
General Blumenthal, Lockyer, and Miller state that this bill ``has 
strong disclosure requirements that will put consumers on notice before 
they agree to buy a car concerning any prior collision or flood 
damage.''
  They also state ``We especially appreciate that this bill tracks the 
Resolution adopted in 1994 by the National Association of Attorneys 
General. That Resolution calls for the strong national standards and 
remedies that are provided for in this bill.''
  Mr. President, I submit this letter for the record.
  This bill also has the support of a number of consumer advocates 
including: Center for Auto Safety, Consumer

[[Page S3124]]

Federation of America, Consumers for Auto Reliability and Safety, 
Consumers Union, National Association of Consumer Advocates, Public 
Interest, and U.S. Public Interest Research Group.
  In a letter of support from the National Association of Consumer 
Advocates, Pat Sturdevant writes ``This bill is entirely consistent 
with views of the major national consumer groups in that it would 
require disclosure of major damage to vehicles. Provide broad coverage 
of most used vehicles, prevent laundering or washing of titles to 
conceal prior damage, provide for effective criminal and civil 
enforcement, and provide a minimum standard of consumer protection 
while allowing states to offer stronger protection to their citizens.''
  I submit this letter for the Record.
  The bill is also strongly supported by the Automotive Recyclers 
Association and the Auto Dismantlers Association.
  Mr. President, there is no question that the sale of rebuilt vehicles 
is a major national problem. We need to insure that we provide the 
proper solution. I believe that this bill is that solution and I urge 
my colleagues to support it.
  I want to thank the Senators from Michigan and Nevada for their 
assistance with this legislation. Their input and support has been 
invaluable to the development of this bill. I ask that letters in 
support of the bill be printed in the Record.
  The material follows:
                                   Office of The Attorney General,


                                         State of Connecticut,

                                                   March 18, 1999.
     Hon. Dianne Feinstein,
     U.S. Senator, Washington, DC.
     Re: The Salvaged and Damaged Motor vehicle Information 
         Disclosure Act
       Dear Senator Feinstein: We are writing in order to express 
     our support for the Salvaged and Damaged Motor Vehicle 
     Information Disclosure Act, a bill which we understand you 
     and Senators Levin and Bryan intend to offer.
       We are very aware of the harm caused to consumers who 
     unwittingly purchase used cars that had sustained major 
     damage. They not only pay far more than the vehicle's market 
     value, they may be placing themselves and their families in 
     danger.
       Despite state efforts to vigorously enforce state laws 
     requiring car sellers to make salvage and damage disclosures, 
     the problem continues to be our nation's top consumer 
     compliant regarding used car sales. It is right for Congress 
     to act. However, in acting, Congress must protect consumers, 
     while permitting the states flexibility to deal with this 
     growing problem.
        Your draft bill achieves those two major goals. It has 
     strong disclosure requirements that will put consumers on 
     notice before they agree to buy a car concerning any prior 
     collision or flood damage. It uses definitions that provide 
     strong baselines of protection, while permitting individual 
     states to impose tougher standards, if that is their choice. 
     It effectively deals with the problem of ``title-washing'' by 
     ensuring that information about prior collision or flood 
     damage remains on vehicle titles, regardless of the state of 
     titling. Finally, it provides strong remedies, by subjecting 
     violations to criminal penalties, civil law enforcement 
     actions by state attorneys general, and substantial private 
     civil remedies.
       We especially appreciate that this bill tracks the 
     Resolution adopted in 1994 by the National Association of 
     Attorneys General. That Resolution calls for the strong 
     national standards and remedies that are provided for in this 
     bill.
       Another reason we support this bill is that it follows the 
     successful mode of the federal odometer law, originally 
     enacted in the 1970's. That law provided for the same types 
     of strong national standards and remedies found in your bill. 
     States have relied on the federal odometer law to file many 
     civil and criminal law enforcement actions against odometer 
     spinners and have recovered millions of dollars in 
     restitution for consumers. Strong federal and state 
     enforcement, plus the private actions brought under the 
     odometer law, have put a real dent in odometer fraud. We look 
     forward to similar results as we join forces to tackle auto 
     salvage fraud.
       Thank you for your leadership on this issue. We look 
     forward to working with you in the fight to protect used car 
     buyers.
           Very truly yours,
     Richard Blumenthal,
                                  Attorney General of Connecticut.
     Bill Lockyer,
                                   Attorney General of California.
     Tom Miller,
     Attorney General of Iowa.
                                  ____

                                           National Association of


                                           Consumer Advocates,

                                                   March 19, 1999.
       Dear Senators Feinstein, Levin and Bryan: We are a consumer 
     protection organization very concerned about the safety 
     hazard posed by the resale of rebuilt wrecked cars. We 
     strongly support the national salvage and damaged motor 
     vehicle disclosure bill which you intend to offer because it 
     will protect consumers against the unsuspecting purchase of a 
     rebuilt wrecked car. This would require disclosure of major 
     damage to vehicles, provide broad coverage of most used 
     vehicles, prevent laundering or washing of titles to conceal 
     prior damage, provide for effective criminal and civil 
     enforcement, and establish a federal minimum standard of 
     consumer protection while allowing states to offer stronger 
     protection to their citizens. The bill is consistent with the 
     recommendations embodied in the 1994 Resolution of the 
     National Association of Attorneys General and adopted by the 
     Attorneys General of all 50 states, so we anticipate that it 
     will receive broad support from law enforcement.
       We remain strongly opposed to competing legislation, which 
     the Washington Post termed ``controversial'' and featured as 
     a example of ``special interest'' legislation. That bill was 
     opposed by the Attorneys General of 39 states, encountered 
     major opposition in the House, and was removed from the 
     Omnibus Appropriations package after objection by the White 
     House. The current measure remains flawed, failing to cover 
     more than half the used cars on the road, and eliminating 
     many of the state law protections that consumers now have 
     against unscrupulous sellers of rebuilt wrecks. Its 
     definitions of ``flood'' and ``nonrepairable'' vehicles are 
     extremely loose, and its standard of proof and weak and 
     inadequate enforcement mechanism would do nothing to deter 
     the fraudulent sale of dangerous rebuilt wrecks.
       It can hardly be disputed that automobile salvage fraud is 
     a serious problem which requires federal action. Each year, 
     more than one million ``totalled'' cars are rebuilt and sold 
     to unsuspecting consumers. These consumers need protection 
     from salvage fraud. I am looking forward to continuing to 
     work closely with leading state Attorneys General on this 
     important public safety issue, and would welcome the 
     opportunity to wok with you and your staffs in obtaining the 
     genuine reform which your pro-consumer bill will provide.
           Sincerely yours,
                                      Patricia Sturdevant.

 Mr. LEVIN. Mr. President, today I am introducing legislation 
along with my colleagues, Senators Feinstein and Bryan, that will 
protect consumers from the unscrupulous practice known as ``title 
washing'' the current practice of selling rebuilt wrecks to 
unsuspecting buyers. The objective of this legislation is to make it 
more difficult for unscrupulous auto sellers to conceal the fact that a 
vehicle has been in an accident by transferring the vehicle's title in 
a state with lower standards than where the vehicle is ultimately sold.
  In developing this bill, Senators Feinstein and Bryan and I worked 
closely with national consumer protection groups and a number of state 
Attorneys General. We have crafted a bill that is truly consumer 
protective and sets high national standards that did not previously 
exist. We took great care to ensure that our bill would not preempt the 
rights of states to retain or enact laws that exceed the minimum 
federal standards in this bill.
  National automobile salvage title legislation is needed because there 
is no uniform standard for when a vehicle must be declared salvage or 
nonrepairable. About 2.5 million cars are severely damaged in auto 
accidents each year. More than half of them are returned to the road. 
Many of these rebuilt cars are sold to unsuspecting consumers without 
disclosure of the car's prior history, increasing the chance of serious 
injury to the drivers and passengers of these rebuilt cars. The 
National Association of Attorneys General estimates that the sale of 
rebuilt or salvaged motor vehicles as undamaged, costs the motor 
vehicle industry and consumers up to $4 billion annually.
  Currently, some states, like Michigan and California and others, have 
tough consumer protection laws dictating when a vehicle's title must be 
branded as salvage or nonrepairable, but other states do not. 
Unfortunately, unscrupulous people now take advantage of this lack of 
uniformity and take wrecked vehicles to states with low or no standards 
to retitle them and thus wipe out the vehicle's prior damage history.
  Our bill would provide for uniform standards of nationwide seller 
disclosure for every vehicle sale of previous salvage and major damage 
vehicles, and ensure these title brands are carried forward with all 
titles each time

[[Page S3125]]

the vehicle is sold. This proposal is consistent with the National 
Association of Attorneys General auto salvage resolution adopted in 
1994.
  This bill also has the support of Michigan's Attorney General, who 
wrote in a letter endorsing the bill,

       This bill will further empower consumers to have more 
     information available in making an informed decision about 
     what is generally their second most costly purchase, motor 
     vehicles used for personal transportation. I urge Congress to 
     enact this bill.

  The salvage title requirements in our bill are modeled after the 
successful 25 year old federal odometer law which requires the milage 
of a vehicle to be disclosed before a vehicle can be transferred. This 
law requires each seller to fill out a statement on the odometer 
reading that verifies its accuracy and a vehicle buyer cannot get a 
state title without this disclosure on the title. Our bill would work 
in a similar manner.
  Our bill is basically a disclosure bill. It requires that whenever a 
vehicle's title is transferred, the seller must disclose in writing to 
the buyer any accident history of the vehicle which includes: salvage, 
flood, nonrepairable or major damage. Our bill defines ``salvage'', 
``flood'', ``nonrepairable'' and ``major damage'' to provide broad 
disclosure and to protect consumer safety. These definitions are 
consistent with recommendations from the state Attorneys General.
  Mr. President, in conclusion, the sale of rebuilt wrecks to 
unsuspecting buyers is a serous problem and should be stopped as soon 
as possible. The Feinstein, Levin, Bryan bill will do just that by 
establishing uniform disclosure standards for all vehicle sales and 
requiring all states to carry forward this disclosure on the vehicle's 
title. Simply put, our bill will put an end to title-washing.
  I ask that additional materials be printed in the Record.
  The material follows:

Resolution Adopted by National Association of Attorneys General, March 
                              20-22, 1994


   mandatory disclosure of salvage history and major damage to motor 
                                vehicles

       Whereas, motor vehicles which are severely damaged or 
     declared a ``total'' loss are often subsequently rebuilt or 
     salvaged and then resold; and
       Whereas, the fact that a vehicle is rebuilt or salvaged is 
     material to any subsequent sale of the vehicle; and
       Whereas, not all states require that a vehicle's salvage 
     history be marked on the vehicle's title or that such a title 
     brand be carried forward on new titles issued or that a 
     vehicle's salvage history be disclosed to subsequent 
     purchasers; and
       Whereas, branding the title is an effective means of 
     allowing dealers, subsequent purchasers and law enforcement 
     authorities to track a vehicle's true history and has been 
     supported by NAAG for tracking vehicles returned under state 
     lemon laws; and
       Whereas, it is estimated that the sale of rebuilt or 
     salvaged motor vehicles as undamaged, costs the motor vehicle 
     industry and consumers up to $4 billion annually;
       Now, therefore be it
       Resolved, That the National Association of Attorneys 
     General:
       1. Supports federal legislation that:
       a. creates a uniform definition of a ``salvage vehicle'' as 
     a vehicle declared a total loss by an insurance company or 
     where the retail cost to repair the vehicle exceeds 65 
     percent of its fair market value immediately prior to being 
     damaged; and
       b. requires that each transferor of a motor vehicle 
     disclose to the transferee orally and in writing at or before 
     the time of sale, whether the vehicle is a salvage vehicle 
     and whether the vehicle has suffered major damage; and
       c. requires that each applicant for a motor vehicle title 
     disclose, on the application, whether the motor vehicle is a 
     salvage vehicle and whether the vehicle has suffered major 
     damage; and
       d. requires that each motor vehicle title issued, 
     conspicuously show whether the motor vehicle is a salvage 
     vehicle and whether the vehicle has suffered major damage, if 
     that information is disclosed on the title application or on 
     any title previously issued by that state or another state; 
     and
       e. provides for recovery of actual damages, minimum 
     statutory damages of $5,000 and attorneys fees, where 
     appropriate, by consumers injured by violation of the 
     statute, and
       f. provides the civil enforcement by state Attorneys 
     General which includes injunctive relief, civil penalties and 
     restitution; and
       h. provides for criminal penalties of up to $50,000 and 
     imprisonment for up to three years for each willful 
     violation; and
       i. does not preempt state laws which provide greater 
     protection for consumers as long as state provisions are not 
     inconsistent with the federal law; and
       2. Authorizes its Executive Director and General Counsel to 
     make these views known to all interested parties.
                                  ____

         State of Michigan, Department of Attorney General,
                                      Lansing, MI, March 19, 1999.
     Re Salvaged and Damaged Motor Vehicle Information Disclosure 
         Act

     Hon. Carl Levin, U.S. Senate, Washington, DC.
       Dear Senator Levin: I am writing regarding your efforts to 
     provide greater protection for American consumers who 
     purchase used motor vehicles that have previously suffered 
     major damage or been salvaged prior to being repaired, 
     rebuilt and put back on the roadways. I believe that it is 
     essential for consumers to be informed of the prior condition 
     of their vehicle so that they may have all available material 
     facts at their disposal in making an informed decision 
     whether to purchase a motor vehicle.
       Not only will your bill mandate disclosure of major damage 
     or salvage conditions, but the bill will also provide an 
     enforcement mechanism including damages and award of 
     attorneys fees to victims, civil penalties and criminal 
     sanctions. I also endorse the section of the bill that 
     empowers state attorneys general to enforce this law through 
     injunction relief or actions for damages.
       This bill will further empower consumers to have more 
     information available in making an informed decision about 
     what is generally their second most costly purchase, motor 
     vehicles used for personal transportation. I urge Congress to 
     enact this bill.
           Sincerely yours,
                                             Jennifer M. Granholm,
                                                 Attorney General.
                                 ______