July 2012 brings new protections for California car buyers

Tuesday, September 27, 2011

AB 1215 (Blumenfield) has been signed by Governor Brown. Once it takes effect, it will offer important new protections to car buyers, advising consumers when the vehicle they are considering to buy has been a salvage or junk vehicle. Any vehicle with a "branded" title — meaning that it has been totaled, bought back via Lemon Law, or otherwise certified as salvage, will receive a red sticker on its window, alerting consumers as to the vehicle's status.

This is important because, when consumers purchase a “totaled” or salvage vehicle, the manufacturer’s warranty is voided, their insurance company may refuse to offer collision coverage, and consumers often face difficulties in settling a claim even when a wreck was another driver’s fault. Insurance companies often will insist that the damage was due to a pre-existing condition or made worse by previous damage. Safety is also a critical issue; salvage title cars frequently will no longer have functional airbags. To make matters worse, salvage car resale values will be merely about half of what a good car with a “clean” title sells for. Now that car buyers will be aware of the vehicle’s status from the outset, they will be better able to reach an informed decision regarding the inherent tradeoffs between price, safety, and reliability that salvage vehicles present.

Dealerships will run a car's vehicle identification number through the National Motor Vehicle Title Information System (NMVTIS) database. NMVTIS reports, which consumers can buy at www.vehiclehistory.gov, are both cheaper and more comprehensive than private vehicle history reports such as CARFAX®, which, by incorporating fewer data from junk/salvage reporting entities, fall short of what consumers need. NMVTIS is the only vehicle history database that obtains reports from those sources in all 50 states, and updates them at least every 30 days.

According to an analysis commissioned by the Department of Justice, use of the NMVTIS database will save Americans between $4.3 billion and $11.7 billion a year, by preventing frauds involving salvage vehicles, and related crimes.

AB 1215 will also raise the maximum "documentation fee" dealerships are permitted to charge car buyers to $80, up from a previous $55.

The law will take effect as of July 1, 2012.