The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“WRECKED CARS, ON THE ROAD AGAIN” mentioning the U.S. Dept. of Transportation was published in the Senate section on pages S929-S931 on Jan. 22, 1999.
The publication is reproduced in full below:
WRECKED CARS, ON THE ROAD AGAIN
Mr. LOTT. Mr. President, I rise today to call our colleagues attention to an article that appeared in the January 8, 1999, edition of The Washington Post. It is important because it touched on a serious and growing problem plaguing our nation's consumers and motorists everywhere. Under the title, ``Wrecked Cars, On the Road Again,'' the Post writer detailed how easy it is for a person to unwittingly purchase a rebuilt salvage vehicle completely unaware of the car's previous damage history.
At this time Mr. President, I ask unanimous consent to have printed in the Record the January 8, 1999, article from The Washington Post.
The article follows:
Wrecked Cars, On the Road Again--Repaired U.S. Test Vehicles Pose
Safety Problems for Unsuspecting Owners
(By Cindy Skrzycki)
The huge concrete barrier rolled down a track at 20 miles an hour and smashed into the 1996 Mustang GT convertible. The Mustang fishtailed, the windshield shattered and the side of the car was heavily damaged.
This Mustang was essentially cannon fodder in a regular series of safety tests conducted by the government--in this case, to determine whether the fuel system would stay intact in an accident. The car passed the National Highway Traffic Safety Administration test and, as usual, the Government Services Administration sold it at an auction on July 2, 1997. Stamped at the bottom of the GSA's sales receipt:
``Salvage Only--Not to be Titled for Highway Use (wrecked/inoperable).''
So why did David Staber end up tooling around Cadott, Wis., in the Mustang after paying $9,500 for it? And why did Daniel Mencheski of Green Bay, Wis., sink $22,000 into a 1995 Chevrolet Tahoe that had been rear-ended by a moving barrier in another government test?
You have to go back to Arkansas, where investigators believe a car salesman figured out how to doctor the bills of sale from the GSA and pass the cars off as any other damaged used car. In other words, cars sacrificed to the altar of safety by the government are illegally finding their way back to the street--where they constitute a safety hazard.
``All of these cars have gone through some form of destructive testing and have extensive to severe damage. There's no assurance they could be repaired or meet safety standards,'' said Philip Recht, deputy administrator of the NHTSA, who called it ``the ultimate contradiction of our mission and whole compliance program.''
It's a problem that happens all too often in the used car business, in which unsuspecting buyers purchase cars with
``washed'' titles that remove any warnings that the cars may have been in accidents and sustained damages that would make them junk in some states.
Bernard Brown, a Kansas City, Mo., lawyer who specializes in car fraud, said there may be as many as a million vehicles totaled, rebuilt and resold to unsuspecting consumers every year.
The NHTSA case also highlights the patchwork of state laws and requirements for obtaining a vehicle title that allow it to be driven and considered safe.
``We have handled cases of persons suffering severe injuries in accidents caused by improperly rebuilt wrecks. We have had experts examining large numbers of unsafe, rebuilt wrecks. We have seen documentation on tens of thousands of rebuilt, totaled wrecks retitled by states with `clean titles' that show nothing of the cars' salvage histories,'' Brown said.
Overall, since the inception of the crash-test program in the 1970s, NHTSA has damaged 7,120 vehicles at four test sites. No one has traced the history of all of those cars, but there may be many more back in commerce, posing unknown safety problems for their owners.
The agency alerted the Department of Transportation's inspector general's office, which is handling the case.
Carfax Inc., a computerized vehicle-history service in Fairfax, has been working with NHTSA to identify how many cars and trucks are likely to have been fraudulently titled. It reviewed the histories of 494 cars that NHTSA crashed from 1995 to 1998, coming up with the 25 that were repaired, retitled, and sold to unsuspecting owners.
Carfax found another 67 that were retitled, but some of those may be ``branded'' as salvage. That means they may be driven in some states and, in others, they could be used only for parts. Scott Fredericks, Carfax director of consumer marketing, said it's likely that ``a goodly number [of the 67] are back on the road, which is a hazard to consumers.''
Legislation stipulates that funds from the GSA auction sales be returned to NHTSA to help pay for more vehicles for its crash-test programs, which cost $2.7 million in 1997. The auctions raised about $290,000 in 1996 and nearly $570,000 in 1997.
In the case of the Mustang, the GSA sold it to Ben Still of Century Auto Sales in Benton, Ark., who paid $5,037 by check. Century Auto, in turn, sold the vehicle to a used car and salvage dealer in Hortonville, Wis., with what appeared to be a ``clean'' Arkansas title, according to documents acquired by The Post. Still's name is on the GSA official receipt, according to a copy obtained by the Post.
Investigators said the Wisconsin dealer then sold the car for $9,500 to Staber, who took ownership on Nov. 6, 1997. The Mustang had only 720 miles on the odometer.
Staber, who owns Cadott Auto Recyclers and buys as many as 500 damaged vehicles a year, said he spent another $8,000 to repair and repaint the car, which retailed for about $28,500.
``I know what I'm doing, but this one got me,'' said Staber, who is suing the Wisconsin dealer from whom he bought the car. ``I saw the title and I never suspected the fraud. I don't like losing $18,000. I work too hard for my money.''
Mencheski's Tahoe also was bought from a GSA auction by the same Arkansas dealer for $6,678, according to the receipt from the auction sale. It then took a circuitous route through northern Michigan before reaching Green Bay, Wis., where Mencheski bought it.
The vehicle now sits in Mencheski's driveway without a title and is undrivable. Mencheski said it will cost him $400 a month in loan payments for the next six years; he borrowed against his 401(k) retirement account to buy a used minivan to replace the useless sport-utility vehicle.
He, too, is suing the dealers who handled the Tahoe before he bought it.
``I wanted one with a clean title,'' said Mencheski, who is a lineman for Wisconsin Electric Power Co. ``It had less than 100 miles on it.''
Here's how the process worked: Over time, investigators said, Century Auto made 13 purchases at GSA auctions. Century Auto then sold three of those cars--Staber's Mustang, another Mustang and Mencheski's Tahoe--to Michael Schmidt, president of Schmidt's New London Auto Salvage Inc. in Hortonville. Those transactions are documented in the official paper trail that followed the cars from the auctions to titling in Wisconsin.
``Our investigation indicates Century Sales fraudulently obtained an Arkansas clean title, number 9720521491, on July 24, 1997, by submitting a fictitious GSA purchaser's receipt and authority to release property. The document submitted did not have the language that was on the original document,'' said a letter that the Wisconsin Department of Transportation sent to Staber. Mencheski got a similar letter.
The warning on the bottom of the receipt saying the car was for salvage only had been erased.
Investigators believe Century Auto made up ``new'' GSA bills of sale, excluding the warning. At the bottom of those, the company allegedly stated the make, model year, the vehicle identification number and odometer reading. A few signatures and dates also were altered, the receipts show.
Still did not return phone calls. His lawyer in Little Rock had no comment.
What apparently happened next was that Still or his associates took the ``clean'' sales receipts to get Arkansas titles for the cars--and got them with no problem.
Roger Duren, of the Arkansas Office of Motor Vehicles, said either the GSA bill of sale or another government form known as ``Certificate to Obtain Title to Vehicle,'' which transfers a vehicle from government ownership to the auction buyer, is acceptable.
The title certificate is supposed to be stamped by GSA
``Not to be Titled for Highway Use'' and would have been a flag to state examiners. In the case of the Mustang, at least, the form mistakenly did not carry that warning, GSA officials said, and Still or his associates did not present that form.
Still--in Arkansas--then told Schmidt he had three cars with collision damage that were drivable, Schmidt said. Still advised that they would go fast. He wanted the money in advance, sight unseen. He promised clean Arkansas titles, according to Schmidt.
``As soon as we saw them, we knew they were crash-test stuff,'' said Schmidt. But the titles didn't arrive until Schmidt agreed to sign ``as is'' forms and accept the cars, Schmidt said that when Still wouldn't take them back, he decided to sell the Mustang and the Tahoe.
Schmidt sent the Mustang convertible to a salvage auction in Appleton, Wis., and Staber was the high bidder. Schmidt said he told Staber everything he knew about the Mustang.
``At the time, I didn't know you couldn't drive a crash-test car,'' he said.
The Tahoe was sold at a private salvage auction to a dealer in Michigan, who took it to a repair shop in Green Bay owned by Mencheski's brother-in-law. The brother-in-law thought the Tahoe would be just the four-wheel-drive his sister and her husband were looking for.
The other vehicle bought by Schmidt was a Mustang coupe, which he sold for parts.
``So, who should be at fault? I'm just the guy in the middle,'' said Schmidt, who believes the blame lies with
``the people who issue the titles.''
As for Still, investigators are looking at whether he forged the signature of a federal official, altered a federal document and gave false information to the Arkansas Office of Motor Vehicles.
Staber and NHTSA learned about the Mustang's unlawful title when Staber had transmission problems and took the Mustang to Jim Carter Ford in Eau Claire, Wis. Ford Motor Co. checked the vehicle identification number and found it was a NHTSA test vehicle, which voided the warranty coverage, according to documents from the investigation.
A month later, the Wisconsin Department of Transportation told Staber he was driving a fraudulently titled government test vehicle.
In the wake of the discovery, NHTSA has alerted consumers on its World Wide Web site to vehicles that have been in the crash-test program for the years 1996 through 1998.
Mr. LOTT. In this case, the vehicle had been totaled as part of a government crash test. After being demolished by the National Highway Traffic Safety Administration (NHTSA), the vehicle, which the Post called ``cannon fodder,'' was sold at an auto auction. It was then rebuilt and sold to a used car buyer in Wisconsin who had no way of knowing that he purchased a crash test car. Apparently, as the article suggests, he is not alone. There may be thousands of government crashed vehicles that have been returned to the road for normal highway driving. Think about that. Thousands of NHTSA crash-tested cars back on America's roads and highways.
This consumer, like millions of other used-car purchasers across the country, fell victim to the fraudulent practice known as ``title washing.'' In the Wisconsin case, a clean title was easily obtained bearing no indication of the vehicle's previous damage history. Since the vehicle's checkered past was concealed, the buyer ended-up paying thousands of dollars for a structurally unsafe car that posed a threat not only to his well-being, but to the safety of everyone with whom he shares the road.
Mr. President, during the last Congress, Senator Wendell Ford (D-
Ky.), and I co-authored The National Salvage Motor Vehicle Protection Act to begin closing the dangerous loopholes that allow unscrupulous rebuilders to take advantage of used car consumers. The Act would have dramatically improved public disclosure by requiring that totaled vehicles be designated ``salvage vehicles.'' It also required that rebuilt salvage vehicles be inspected to ensure that stolen parts were not used in the repair. Additionally, ``rebuilt salvage vehicles'' would have a decal permanently affixed to the driver's side door jamb. The bill also contained a provision requiring all previous brands on a vehicle to be carried forward to each state retitling the vehicle.
As my colleagues are aware, the practice of selling rebuilt salvage vehicles as undamaged used cars costs consumers and the auto industry nearly $4 billion annually. It is estimated that every year, as many as one million vehicles are ``totaled,'' rebuilt, and placed back into used car commerce. In some states, as many as 70 percent of all
``totaled'' vehicles may return to the roads after being purchased by unsuspecting citizens. While most states require some type of disclosure on a vehicle's title to indicate its history, the requirements vary from state to state, and it is the resulting hodgepodge of conflicting state laws that allows dishonest rebuilders to obtain ``clean'' titles.
When a title has been laundered, all future purchasers are deprived of important information alerting them to potential problems with the vehicle. These later buyers may include private purchasers or automobile dealers. Dealers typically purchase used vehicles from auctions and from their customers as trade-ins, and then sell them to used car consumers. In such cases, both parties are victims.
Congress acted on this problem by adopting legislation in 1992 directing the creation of a task force to examine the problems associated with salvage vehicles. The task force included a diverse group of stakeholders who concluded that the lack of uniformity in state laws allows unscrupulous rebuilders to easily wash titles and to subsequently sell rebuilt vehicles as undamaged. It also noted that rebuilt vehicles could be a risk to the driving public. Among the task force's recommendations was the development of federal legislation to create uniform definitions and procedures for titling salvage vehicles.
The National Salvage Motor Vehicle Protection Act was based largely on the task force's recommendations. I do not want the recommendations of a federal task force to collect dust. All too often, Congress does not follow through with the recommendations of commissions it creates. Here is one of those instances where Congress wants to implement them--
a majority of both chambers want to enact them. A widely diverse bipartisan group.
This much needed legislation received the formal support of 57 Senators, including the distinguished Minority Leader, Tom Daschle, Senator McCain, Chairman of the Commerce Committee, Harry Reid, and other colleagues from both sides of the aisle. It also garnered broad bipartisan support in the House of Representatives which approved similar title branding legislation by a vote of 333 to 72. Even though this non-partisan consumer-friendly legislation was widely supported by both chambers of Congress, it fell victim to a steady stream of misrepresentation. Throughout the legislative process in both chambers, a number of significant changes were made to address the concerns of state attorneys general and consumer groups. Unfortunately, even after these changes were adopted, the National Highway Traffic Safety Administration, a direct contributor to this national problem, opposed this modest but important bill as a bargaining chip for its own agenda.
Mr. President, it is my intention to reintroduce auto salvage legislation during this session. I have given NHTSA the opportunity to review and comment on the proposed bill. I welcome NHTSA's input and I am hopeful that the Administration will join with us, and the American Association of Motor Vehicle Administrators, the experts on titling matters, to foster national uniform titling requirements.
It is time to put politics aside to protect the public from the practice of title washing and the greed of dishonest rebuilders.
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