California Ramps Up Efforts to Protect Used Car Buyers

When Americans buy a pre-owned vehicle, there are two major issues which they have to contend with. First, they have to decide whether the price being offered represents a wise investment of their purchasing dollars. And secondly, they have to determine whether the used vehicle is in as reliable of a condition as the dealer say it is.

Thankfully, used car buyers in California are now getting some help with that latter conundrum. At the start of July, a new law took effect in that state which aims to prevent consumers from purchasing used vehicles that have spotty histories.

About the New Law
The measure is called Assembly Bill 1215, and it was signed into law by Governor Jerry Brown in September of 2011. The bill had three main provisions, all of which dealt with mandates for auto dealers. It’s the third one, though, that has the most impact for consumers.

  1. Dealers must use an electronic titling system to help speed up the process of registering vehicles in the state
  2. The maximum fee that dealers can charge for automotive lease or purchase transactions is $80.
  3. Used car dealers now have to check a federal electronic database before selling any pre-owned vehicle to a buyer. If the database, which is known as the National Motor Vehicle Title Information System (NMVTIS), reveals that a car or truck was destroyed in a flood, identified as a “salvaged” vehicle, or otherwise declared a total loss by an auto insurance company; then the dealer must disclose that information to potential purchasers.

What Kind of Reaction Is It Getting?
AB 1215 passed the California legislature with widespread support — not only from the major political parties, but also dealer trade groups, law enforcement agencies, and consumer advocacy organizations. It’s being hailed as the first-of-its-kind law in the nation designed to help protect consumers from unknowingly buying a car that was previously damaged, junked, or totaled. Many of these “compromised” vehicles are bought by unscrupulous individuals and companies, and then sold to unsuspecting buyers in another state. Some officials believe that the bill will save the state between $4 billion and $11 billion in fraud-related costs.

But even though the law has already taken effect, there’s a chance that it may be changed in the near future. That would happen if Senate Bill 990 is passed by California lawmakers. This measure would allow used car dealers to use any commercial automotive history database, not just NMVTIS, to check the backgrounds of their vehicles. The bill is currently stuck in committee in the state Senate.

SB 990 has not received the unanimous support that AB 1215 has. On one hand, many business organizations support the proposal, because it gives dealers a choice to either use NMVTIS or a privately-run database like Carfax. But some groups, like the Consumer Federation of California, feel that the measure would gut the protections provided by AB 1215, because other automotive databases may have lower standards of reporting information and are not regulated by the federal government.

Whatever happens with SB 990, it appears that California consumers will be better informed when they decide to buy a pre-owned vehicle. With AB 1215, customers’ odds of accidentally buying a “lemon” at the used car lot should diminish substantially in the years to come.

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