CA not participating in used car database

January 27, 2009 3:21:00 PM PST
A new national data base is expected to be announced by the end of the week that would give car buyers the complete history of a used car at little or no cost. There's only one problem ? California, so far won't let its data be released to the public.

More than one out of 10 cars on the road in the United States is registered in California. So if the state's information isn't public, California's 33 million vehicles will be excluded. And that increases the chance used car buyers could buy a previously wrecked or salvage vehicle, and not even know it.

Terrence Holman of Hercules bought a 1999 Oldsmobile Aurora in January 2008. It wasn't until nine months later that his insurance company informed him he had bought a salvaged vehicle.

"I couldn't believe it. They showed me the registration where it clearly said salvage," said Holman.

7 On Your Side took hidden cameras to an auction in Fremont to take a close up look at salvaged vehicles.

Vehicles are declared salvaged after being in serious accidents and deemed not worth repairing by insurance companies.

They're often sold at bargain basement prices at auctions. Most buy them for scrap metal and parts, but sometimes these cars are rebuilt, and resold by auto dealers.

A San Francisco attorney specializing in liability cases says that's dangerous.

"In a first crash, they lose their integrity. They lose their ability to absorb energy. So if you get a rebuilt car that's put back on the road and God forbid, you're in a second crash, you might not have the protection," said attorney Mark Anderson.

They also lose their value. Anderson estimates salvaged vehicles are worth up to 40 percent less than those with clean titles.

Holman bought his car from San Leandro Motors.

The DMV has stripped then owner Larry Singh of his license, finding him guilty of fraud, deceit or fraudulent representation for not disclosing a salvaged vehicle.

San Leandro Motors is now under new ownership.

The sale of salvage vehicles is not unusual. One California consumer group estimates there are 1.7 million salvaged cars on the road in California.

Congress mandated in 1992 that the federal government make public information about the reliability and safety of used cars. A data base of used cars was supposed to be released by 1996, but it never happened.

"Part of it is bureaucratic foot dragging. Part of it is you have private companies like CARFAX who have an interest to lobby against this," said Public Citizen attorney Deepak Gupta.

That's something CARFAX denies, telling us: "It supports efforts to get information into the hands of consumers."

Whatever the reason, Gupta sued the federal government to get the data base going and in September he won. Judge Marilyn Patel ordered the release of the data base by the end of January.

California has already begun submitting its information, but with a big restriction, the public can't see it.

Rosemary Shahan from Consumers for Auto Reliability and Safety thinks she knows why.

"California's DMV has said they're concerned about losing revenue from that they get from selling our data to private companies," said Shahan.

7 On Your Side has learned through a public records act request that the DMV earned $69 million selling records to various vendors in the last fiscal year.

But the DMV denies money is the issue. Its aim, it says, is to protect the privacy of California drivers. And until it knows what safeguards are in place to protect private information, it won't allow its release.

Meantime, people like Terrence can only hope consumers get better protections soon.

"We're going to put pressure on the DMV to participate in this," said Shahan.

Gupta says if necessary he'll file suit against the state. Right now, 13 other states have no plans in place to even submit information to the data base. But California is the state with the most cars, so it's getting all the attention.

As for Holman, we contacted the former owner of the dealership for him. Larry Singh is now offering to pay the difference for any value the car may have lost due to its salvaged title.