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SACRAMENTO, Calif. — A new California bill signed this past
summer — Assembly Bill 1215 — which created changes for salvage vehicles that
eventually make it onto a dealer's retail lot may soon be altered, that is, if
the proposed Senate Bill 990 goes through.

This legislation would allow the use of reports from
commercial data providers, such as Carfax and AutoCheck, instead of just from
the National Motor Vehicle Title Information System to satisfy current consumer
protection laws regarding the sale of used cars.

This would go against part of what was recently passed with
AB 1215, which stated that any franchised or independent store in California
that tries to retail a salvage unit must place a special sticker on the window
and include the report from the NMVTIS.

Gov. Jerry Brown signed the measure —  AB 1215 — after California legislators
introduced it back on Feb. 18, 2011. The new law went into effect this past
July.

And what purpose did AB 1215 serve?

At the time the bill was passed, The California  New Car Dealers Association explained,
"California Assembly Bill 1215 will require all car dealers to run all used
vehicles they sell through NMVTIS, a national database overseen the by U.S.
Department of Justice, to make sure the vehicle is not stolen, salvaged,
junked, flood-damaged or a Lemon Law buyback," the association explained.

"Although not every state participates fully in NMVTIS, its
database currently contains more than 87 percent of all vehicle title
information nationwide — a percentage that will only increase as more DMVs come
into compliance with the federal mandate," it continued.

Consumer Groups Rally Opposition

But now, Senate Bill 990 has hit the docket. And some
consumer groups are not pleased with this development.

The Consumer Federation of California announced its
opposition late last week to the bill that is claims would "gut" last year's AB
1215.

"The Consumer Federation of California announced its
opposition today to Senate Bill 990 (Vargas), which would allow the use of
reports from commercial data providers instead of from the National Motor
Vehicle Title Information System to satisfy current consumer protection laws
regarding the sale of used cars," the CFC explained.

AB 1215 apparently had wide support from consumer groups;
auto dealers and their trade associations, which represent both new- and
used-car dealers; international law enforcement officials; non-profits that
represent law enforcement officials from the United States, Canada and Mexico;
as well as the former head of the FBI's Auto Theft Task Force.

Further explaining the organization's point of view, Richard
Holober, executive director of the CFC, said, "SB 990 would undermine consumer
protection in order to enhance the profits of a single out-of-state company.

"Carfax would undoubtedly benefit from this legislation, but
it would be categorically unsafe for consumers," he asserted.

The organization also expressed worry that the bill's
language would allow dealers to use any commercial database for vehicle history
reports, "with no given standards for reputability or accuracy of data, and no
repercussions for providing false or inaccurate information."

Explaining their reasoning behind this claim, the CFC cited
that private data providers are not subject to regulation like the NMVTIS is.

Dealer Reaction

And in perhaps some interesting news, dealers seems to be
opposed to SB 990, as well.

In a letter from the California New Car Dealers Association
to state Sen. Mark DeSaulnier — who is chairman of Senate Transportation &
Housing Committee — the organization explained its opposition to the bill, as
well as stressing its support for AB 1215 and what it means for the industry
and consumers.

The California New Car Dealers Association is a statewide
trade association that represents the interests of over 1,100 franchised new
car and truck dealer members. CNCDA members are primarily engaged in the retail
sale and lease of new and used motor vehicles, but also engage in automotive
service, repair and part sales.

The letter, sent this past March, stated, "We (CNCDA
members) are writing to express our opposition to SB 990, which would modify
the first in the nation requirement that dealers post a notice on vehicles that
have been identified by the National Motor Vehicle Title Information System
(NMVTIS) as junk or salvage automobiles or as having title brands as adopted in
AB 1215 (Blumenfield) of last year.

"As discussed below, with AB 1215 set to become operative in
July and the barrier to entry in becoming a NMVTIS data provider negligible, we
see no reason why the provisions of last year's measure should be revisited in
2012," it continued.

The letter then went on to highlight why the organization
has chosen to take a stance against the bill, pulling from a couple of
different points, ranging from the danger of weakening consumer protection to
adversely affecting the state budget:

—"AB 1215 was painstakingly negotiated between consumers,
dealers, legislative committees and other stakeholders. CNCDA actively
participated in those negotiations and we will not 'walk back' on the deal that
was struck last year. Plus, the provisions now contained in SB 990 were
specifically rejected by this committee in 2011."

—"Before AB 1215 can be implemented, SB 990 seeks to weaken
its consumer protections. Hundreds of dealers are ramping up to comply with the
new NMVTIS requirements in July yet this bill throws into doubt what the legal
requirements will be this summer, or next January when SB 990 would take
effect."

—"SB 990 is poorly drafted with vague and ambiguous
language. Under the bill, any private entity that provides 'vehicle history'
information in all 50 states and Washington, D.C. qualifies as a ‘commercial
data provider.' However, there is no specificity as to what qualifications the
private entity must have, no definition of ‘vehicle history' (compared with
‘vehicle history report' as specifically defined in federal law and AB 1215),
nor what ‘obtains data' includes – the bill lacks a minimum threshold for the
type and volume of information needed for an entity to become a "commercial
data provider."

—"NMVTIS is the best database available for title
information. While some third-party vehicle history providers include accident
and repair information, only NMVTIS, by federal law, requires all insurance
companies, DMVs, salvage and junk yards to report total loss and branding
information. This database is, as the Legislature concluded last year, the best
place to start in determining a vehicle's title history."

—"Repeal of the NMVTIS mandate will adversely affect the
state budget. DMV will save hundreds of thousands of dollars after the passage
of AB 1215 because increased California utilization of NMVTIS will help the DMV
meet our participation requirements. SB 990 could eliminate those cost
savings."

—"Third-party providers can become NMVTIS providers at
minimal cost. For as little as $6,000, Carfax or any other person who seeks
NMVTIS information can become a vendor and in turn provide the information
dealers need to comply with AB 1215. We see no reason why third party providers
can't meet this low threshold and provide this information to their current
dealer customers and we have repeatedly asked Carfax to do so."

To view more of the response to SB 990 from the CNCDA
members, see the complete letter here.