The road to car safety will get a lot bumpier after July 1, 2012 when a law will take effect that threatens to put used car buyers at risk when
purchasing a vehicle. While this law was designed to protect Californians, it does the exact opposite.

At the centerpiece of the issue is that used-car dealers provide National Motor Vehicle Title Information Service (NMVTIS) reports to California car buyers. The NMVTIS report is a U.S. government report administered by the Justice Department to help keep track of car titles, and was never designed to track vehicle history.

But a recent study, “Comparative Study of Vehicle History Reports: Comparison of NMVTIS to Commercially Available Vehicle History Reports” by Alan C. Donelson, Ph.D. and Raymond C. Peck, MA concludes that the new law will give Golden State used car buyers a false sense of security.

The study conducted a side-by-side comparison of the NMVTIS report to a commercially available vehicle history report by using a random sample of 2,000 California cars. And, it found that the government report failed to arm consumers with the information necessary to make an informed and, often times, safe purchasing decision.

How is this possible? First, a commercially available vehicle history report has a unique advantage in its ability to alert used-car dealers and
consumers to “total loss” that didn’t result in the issuance of a title brand. In other words, the NMVTIS report doesn’t track cars that are
totaled, just the cars that received new title brands as a result of the wreck. Conversely, commercially available reports are more likely to cover
all total loss cars.

Second, a commercially available vehicle history report is much better at reporting vehicles with police accident reports and other indications of damage. Again, NMVTIS is limited in what it covers. It does not receive any information on fender-benders or other smaller wrecks that didn’t result in a total loss. In fact, the study found that often times the commercially available report listed damage to a vehicle that the NMVTIS report awarded a clean stamp of approval. Ironically, the NMVTIS website acknowledges this and states: “Private vehicle history providers offer beneficial information to the public that is not intended to be included in NMVTIS, such as vehicle repair histories, recall information, and other care and maintenance data.”

Finally, the new law will discourage the use of commercially available vehicle history reports and creates an opportunity for widespread fraud in California, which could become a dumping ground for other states that do not participate in the NMVTIS program. Californians will be vulnerable to individuals and dealers looking to scam consumers and sell a car that is damaged.

Simply put, we’re asking the right question but posing the wrong answer. Yes, we want to empower consumers with information about used cars. But we don’t do it by giving them a false sense of security based on a Justice Department program that doesn’t cover all of the relevant facts about a car. We do it by giving consumers the information they need and deserve. And current research indicates that the way to achieve that is by allowing commercially available reports to be used.

We believe the best solution is the Used Car Safety Act of 2012, which is legislation authored by Senator Juan Vargas. Essentially, the Senator’s bill will give consumers the chance to get commercial reports on a car’s history. That’s how we empower consumers, increase safety and ensure that a car’s full history is made known.

We need to uphold consumer safety. We need to fully inform used car buyers. We need the Used Car Safety Act of 2012.

Joel Ayala is the President of Ayala Development and the former Director of the Governor’s Office of Economic Development and the former CEO of the CA Hispanic Chamber of Commerce.