1. "When it comes to car theft, we re part of the problem."
In 2008, the most recent year for which data is available, vehicle theft accounted for $6.4 billion in losses, according to the National Insurance Crime Bureau. That s down from 2007 s $7.9 billion, but still a notable sum. Part of the problem is something called VIN cloning, where a stolen vehicle s identification number is switched with that of a junked car and a clean title is obtained from a state-run Department of Motor Vehicles, which handle everything from issuing drivers licenses to registering plates.
Back in 1992, the federal government created the National Motor Vehicle Title Information System, a database to combat VIN cloning. Yet today, the NMVTIS still doesn t have complete data from all the state DMVs (the District of Columbia and Illinois aren t participating at all) and VIN cloning accounts for a significant percentage of the 1.3 million cars stolen in the U.S. each year, says a spokesman for NMVTIS. To maximize the consumer fraud prevention benefits of the system, all states must fulfill their statutory and regulatory obligations to provide data to NMVTIS and perform title verifications using NMVTIS, says the spokesperson.
Still, Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a nonprofit consumer-advocacy group, recommends checking NMVTIS before buying a used car. If a car in the database is marked as totaled, chances are you don t want it, because it s probably been smashed or in a flood and those cars can never be really safe, she says. (The American Association of Motor Vehicle Administrators, an industry group, didn t return calls or email for comment on this article.)
2. "Your used car could be a ticking time bomb on wheels."
Remember the pictures of flooded automobile lots after Hurricane Katrina? You could end up buying one of those vehicles today and never know it. Once deemed totaled, cars are supposed to be sold for scrap. But unscrupulous sellers can buy them at auction, then replace the title at a Department of Motor Vehicles office in another state by claiming the car is lost; they can also re-title it in a state that doesn t recognize flooded as totaled. The practice is called title washing.
Sometimes, consumers don t even see a title because it goes directly to the lender, says Shahan, who has testified before Congress about title washing. The beauty of a national database is it doesn t matter what s on the title, it s there permanently, she says. CARS has also been pushing the Federal Trade Commission to require notice on the car that it s in the database as having been totaled. The first question is has this thing been wrecked, and how badly, and that should be on the car, she says. You are going to put your children in this car. Why should [that information] be a secret?
For a car s history, consumers can check Carfax.com, an online data aggregator that provides vehicle history information to consumers, or NMVTIS. When a DMV generates a title brand for a car and it s reported to the online databases, it will stay permanently on the online report so that flood damage and other events can t be removed from a title.
3. "Who needs a title anyway?"
In tough economic times, many consumers have chosen to sell cars back to dealers with the understanding that the dealer will pay off the loan and retrieve the title from the lender. But dealers sometimes sell cars without ever paying off the loan or retrieving a title, essentially selling cars they don t legally own, says CARS president Shahan, adding DMVs allow this.
This practice causes two types of problems. Either the original owner will be stuck with a loan that they thought they d gotten rid of, or the person who buys the car from a dealer will have new tags and registration, but the vehicle possibly will get repossessed because of the former owners lien. While car dealers cannot legally sell a car without the title, it has happened in the past and is appropriately handled when the Motor Vehicle office is made aware of the situation, according to Glenn Jackson, Director, drivers license division, and Linda Sitz, Director, motor vehicle division, with the North Dakota Department of Transportation. A spokesman for the National Association of Auto Dealers said he hadn t heard of the practice. The bottom line is if it occurs, it s a clear violation of state law, so if it ever happens to a car owner, they d have redress, he says.
4. "Consistency is the hobgoblin of . . . well, not us, that s for sure."
Rules that differ by state (and city, and county) may be a problem for law-abiding drivers, but for those looking to slip through the cracks, they re a godsend. For example, emission checks are required for registration in 13 states and in parts of another 17 states, but not at all in 20 states. And some drivers register a car in a state with lower taxes, then drive it in their own state with expired plates.
The rules of the road have traditionally been handled by the state, and it s unlikely it will change, says Russ Rader, a spokesman for the Insurance Institute for Highway Safety. You end up with a patchwork of different laws, for example teen driving laws across the country vary greatly, and that s the case for a lot of different laws they vary in how tough and effective they are.
Jackson and Sitz of the North Dakota Department of Transportation say that variations in state laws can cause problems at times.
5. "We re just as good at breaking the law as enforcing it . . ."
DMV employees handle sensitive information, and staffers have taken advantage of their positions. In May, four employees of the California Department of Motor Vehicles were arrested on multiple counts of fraudulently processing driver licenses and affecting a title-washing scheme that involved several vehicles. That came on the heels of an incident in Florida, in which seven employees at the Florida state license bureau in Delray Beach were arrested in an alleged scam that gave drivers licenses to more than 1,500 illegal aliens.
Our investigators are constantly performing checks on employees, and... perhaps that s part of the reason there are a number of arrests, says an information officer at the California DMV.
The communications director for the Florida Department of Highway Safety and Motor Vehicles says the Delray Beach episode was unusual. We had some folks that made some poor decisions," he says. "They violated the trust we put in them and they violated the law.
6. "We might give away your identity."
Identity theft is the No. 1 crime in the U.S., according to Werner Raes, president of the International Association of Financial Crimes Investigators. The simplest form, mostly used by beginners, is to ask the DMV for a duplicate license in someone else s name. Identity thieves tell the DMV clerk that they ve lost their license or that it was stolen, then provide someone else s illegally obtained information.
If you ve got an individuals full name and place of birth and social security number and you know how to talk to people, or you know what a certain state requires to issue an ID, you could waltz into a DMV office and get it done and walk out with a legitimate ID for someone else, says Frank Scafidi of the National Insurance Crime Bureau, or NICB. You get a credit card, you start running up charges, and before law enforcement or the owner is even aware, you re long gone.
To prevent identify theft, some state DMVs take precautions such as checking a database of past photographs before renewing or mailing the completed license to the address provided. Nevertheless, Raes recommends checking your credit report at least once a year to see if there s any unusual activity.
7. "Your vanity plate may say 'MUG ME .'"
Most DMVs have a set of guidelines to follow to obtain personalized plates, but these plates could make you a more likely target for criminals, says Phil Messina, a retired New York City police sergeant and founder of a self-defense school in Lindenshurst, N.Y. Personalized plates indicate that the person bearing them wants to be noticed, says Messina. The downside of doing things that tend to get you noticed is that they can get you noticed by the wrong kind of people.
Frank Scafidi of the National Insurance Crime Bureau says he hasn t heard that personalized plates increase the risk of a stolen vehicle. However, he says, I wouldn t be surprised because people who are in the business of breaking the law sit around and think of things we would never dream of."
8. "We want to get rid of drunk drivers, too."
Every day, 32 people in the U.S. die in motor vehicle crashes that involve an alcohol-impaired driver, amounting to one death every 45 minutes, according to the Centers for Disease Control and Prevention. What s more, data from 2008 and 2009 cited by the National Highway Traffic Safety Administration shows that drivers with a blood alcohol level of 0.08% or higher involved in fatal crashes were eight times more likely to have a prior conviction for DWI than were drivers with no alcohol (8% and 1%, respectively).
To help keep drunk drivers off the roads, some states have dropped programs that allow drivers to take a driver improvement course and expunge violations from their records faster. In California, for instance, judges used to have the option of allowing violators to attend traffic school in exchange for having two-point violations, such as DUIs, dismissed. At the time, there were 1,200 to 1,500 two-point violations a year that received traffic school dismissals, according to an information officer for the California DMV. Recent legislation prohibits dismissal of two-point violations with the use of traffic school.
Of course, drivers are given a second chance. The California DMV automatically suspends a person s license for a DUI arrest, but only for five months the first time, and a year the second time. Meanwhile, suspensions imposed by courts dealing with first-time DUI cases (which are concurrent with the DMV suspensions) typically last about a year, according to the California DMV spokesman. Alcohol-related violations are removed from a record after ten years, and the points, which are used by insurance companies and sometimes potential employers, are removed after just three years.
9. "We give your kids a license to crash."
In the U.S., teenagers drive less than all but the oldest people, but their numbers of crashes and crash deaths are disproportionately high, according to an unpublished analysis of a Department of Transportation survey. The crash rate per mile driven for 16-year olds to 19-year-olds, for example, is four times the risk for older drivers. Risk is highest at age 16 -- the crash rate per mile driven is twice as high for 16-year-olds as it is for 18-year-olds to 19-year-olds.
To promote safer driving, every state has phased in some form of a graduated licensing program, which makes a new driver go through a series of steps, such as a learner s permit or restricted license before receiving a full-fledged license. Such programs reduce the number of teen driving accidents by 10% to 30%, according to a spokesman for the Insurance Institute for Highway Safety. However, the degree of the programs varies by state. North Dakota, for instance, requires drivers to be 14 and a half years old to get a learner s permit, one of the youngest ages. The process in North Dakota is not specifically a graduated drivers license program, in that it doesn t have intermediate licensing period or certain restrictions on the young driver, say Jackson and Sitz of the North Dakota Department of Transportation. At this time, the state is not considering an older driving age.
10. "We get faked out."
It s like a chef failing a taste test sometimes the people who give out IDs can t tell if they re real. A driver s license is often considered the default form of identification in the U.S., used to board airplanes, rent cars, and open bank accounts. Yet it s not hard to obtain one illegally by taking advantage of the weakest link in the U.S. identification system: the birth certificate.
The easiest route to obtaining a fake ID begins with creating a fake birth certificate, says Frank Scafidi of the National Insurance Crime Bureau. Because of the quality of printers and software programs available, you can make a very good phony document in your basement if you have someone s name and you know enough about them, which is all public record now, he says. It happens all the time and the DMV falls for it.
Because the Department of Motor Vehicles also issues alternative nondriver s license ID cards a revenue booster in some states the DMV is, in effect, being used as an identification verifier. Yet it s not their main responsibility. Their task is to certify that people can operate a motor vehicle, says Raes of the International Association of Financial Crimes Investigators. He suggests issuing national identification cards, but many groups are opposed to the idea, saying the lack of privacy would overshadow the safety and security benefits.