NAAA sees 4 states reclassifying clean-title vehicles to salvage

FREDERICK, Md. - 

The National Auto Auction Association has seen four states that are reclassifying vehicles that previously have been given a clean title as a salvage unit.

As of Aug. 8, NAAA said the locations now following this protocol include Nevada, Ohio, Virginia and Wyoming. The association explained that upon transfer of ownership, some jurisdictions have begun branding/notating previously issued clean titles as salvage titles based on JSI (junk, salvage and insurance) reporting in the National Motor Vehicle Title Information System (NMVTIS).

As part of the Anti-Car Theft Act of 1992, NAAA pointed out that various entities (including salvage pools/auctions) are required to report to NMVTIS inventory that comes into its possession that meets the federal definition of “salvage” or “junk.” The association added that insurers are required to report all total losses.

“These reporting requirements were implemented to prevent bad actors from utilizing the VINs and/or titles of severely damaged or destroyed vehicles in order to obtain clean paperwork to create cloned vehicles,” NAAA officials said, adding more explanation directly from NMVTIS, which stated:

“Both the Department of Justice and the state and local law-enforcement community are concerned that a significant number of these junk and salvage automobiles purchased from salvage pools have their VINs or titles used to create cloned vehicles, or otherwise make stolen vehicles appear legitimate. Such entities must report all salvage or junk vehicles they obtain, including vehicles from or on behalf of insurance carriers, that can reasonably be assumed to be total loss vehicles.”

NAAA acknowledged a question that auctions and dealers are likely asking. If the vehicle was required to be reported to NMVTIS, why didn’t the vehicle already have a salvage title?

NAAA officials explained that the federal definition of “salvage” and “junk” that would trigger a reporting requirement is not the same as states’ definitions for salvage/junk that would trigger a title branding/notation. NAAA reiterated states are not required to brand titles based on NMVTIS reporting. However, the association said some states are choosing to do so as they have modernized their operating systems and pulled NMVTIS information into their normal process flow for title issuance.

To clarify the point further, NAAA pointed to more details from NMVTIS, including:

“The Department of Justice recognizes that many state laws have differing requirements and definitions of terms of such as ‘junk’ and ‘salvage.’ The NMVTIS requirements do not alter these state laws and the state laws do not prevail over federal definitions and requirements. The information reported to NMVTIS is not required to be used by any future state that titles a vehicle included in an auto recycler, junk or salvage yard report. The NMVTIS reporting requirements do not replace or negate any state reporting requirements.”

NAAA closed its latest update on the matter saying that the association “is working with the industry on this issue.”

If auctions experience any issues regarding this title matter, they are asked to contact Tricia Heon at NAAA by sending a message to theon@naaa.com.

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