North Carolina Dealer Lien Fraud Has Unhappy Consequences

I just read an excellent editorial by the Times-News of Henderson, NC about an unfortunate fraud situation. The links to the editorial and the original article are below. Here's what happened. Facts are from the Times-News, inferences (infer) are mine.

November or December 2008: (infer) Cars America acquires a 2004 Honda Accord (probably a trade in). This car has a lien held by American General Finance Services.

December 2008: Richie Ritter purchases a 2004 Honda Accord from Cars America. He finances the vehicle with a $14,000 loan provided by the State Employees Credit Union (SECU).

December 2008: Dealers are normally responsible to complete the application for title (and note a lien) for the owner and especially the lender (SECU). This would include sending a check for the remaining balance of the loan to American General. American General would then release their lien and send the title to the dealer to accompany the application for a new title. This does not happen - American General does not receive a check for the balance of the loan.

December 2008: (infer) Somehow Mr. Ritter receives a plate and registration for the vehicle. This is problematic since instructions for registration require "Complete the title application (MVR-1), declaring all liens, signed in the presence of a notary" and should have been accompanied by the title received from American General.

December 2008 - January 2010: (infer) SECU never receives the title with their lien noted. American General at some point stops receiving payment on the loan and begins repossession process.

December 2008 - January 2010: Mr. Ritter makes loan payments to SECU totaling about $4000.

January 2010: (infer) American General eventually tracks down SECU and lets them know they are asserting their right as lienholder to repossess Mr. Ritter's Accord.

January 25, 2010: SECU informs Mr. Ritter that the vehicle is going to be repossessed by American General.

It looks like Cars America will end up defrauding American General, SECU, and Mr. Ritter, as none of them will likely fully recover what was lost. We're especially sorry for Mr. Ritter's loss since he is the ultimate victim here. This is one reason why state programs like ELT are so valuable. One of our customers told us of a similar situation in South Carolina, but because they combined vigilance with tools (ELT and Title Check) they were eventually able to fully recover the loss from the dealer.

We are hopeful that North Carolina will provide similar services. We'd love to assist lenders and vehicle owners to avoid similar fraud situations.

Sources:
January 27, 2010 story in Times-News
January 29, 2010 Editorial in Times-News

Image: Cars America Logo

Recommendations when Applying for a Lien in South Carolina

Based on feedback from customers plus our own experience and interaction with the SC DMV, we've put together some suggestions for lenders when applying for a lien on a title in South Carolina.

1. Instead of having the customer directly sign the Form 400 (SC's title application), obtain a limited Power of Attorney. This will help in case resubmissions (lost mail?) are required.

2. Carry your paperwork to a DMV office. You will get either immediate (if you wait on the paperwork) or generally next-day response to your application. Problems with the application are reported to you immediately. There is no faster way to get a lien recorded.

For absolute best results, take your title application(s) to one of the five dealer central SC DMV locations. These are the ideal places to turn in paperwork and generally provide better service for ELT transactions. Transactions can be provided in a batch with a cover sheet listing the individual vehicle numbers (VINs). From the list of office locations (http://www.scdmvonline.com/DMVNew/offloclist.aspx) choose Dealer Central from the Services dropdown.

Several of our customers use a courier service to deliver title applications to a DMV office.

3. Mail your paperwork to Blythewood using a tracking number. Any kind of minimal delivery confirmation will allow you to be certain your application was received by the DMV. Consider recording the tracking number as part of the lien history in Premier eTitleLien™.

4. If you don't (or can't) take a title application to a DMV office and don't (or can't) use some delivery confirmation, keep track of the mailing date and delivery method (including who posted it). Consider recording these details as part of the lien history in Premier eTitleLien™.

At our last quarterly meeting with the DMV, they told us they would begin providing receipts for items that had been received at the Blythewood office. This would bring the feedback provided there in line with the feedback you get at a field office. DDI will continue to work with them to improve document tracking.

Image: The Palmetto State Glove Box Guide to Bar-B-Que

Nebraska: Electronic Liens and Titles Coming by 2011

Nebraska is getting an ELT program! This is great news for both Nebraska lenders and vehicle owners.

Last year, the Nebraska legislature passed a bill requiring the DMV to implement an Electronic Liens and Titles (ELT) program by January 1, 2011 which they are on track to do. Current plans include having a public inquiry service (which we usually refer to as a title inquiry), a very valuable feature.

The Nebraska DMV invited us to come meet with them and several lender and dealer representatives to discuss how an ELT solution provider like DDI works with lenders and a state electronic lien and title (ELT) program. Our company president, Glenn Thames, encouraged lenders to stay involved in the shaping of the program and to request that the state provide features (like a title inquiry) that are beneficial to lienholders in managing their titles.

We're looking forward to working with Nebraska lenders as the ELT program in Nebraska kicks off.

Image: Toy Car from the Nebraska State Historical Society

NMVTIS Saves the Day

NMVTIS (National Motor Vehicle Title Information System - pronounced En-Em-Vee-Tis) is a data system that stores information about titles issued by each of the 50 states plus DC. States are required to both submit data about their titles to NMVTIS and check NMVTIS to verify titles being transferred from other states. The US Department of Justice has ruled that all states must participate by January 1, 2010. (That ruling provides background about the laws requiring the system be developed and requiring participation.)

Some businesses are also required to provide data about vehicles, including insurance carriers and junk/salvage companies. The website at NMVTIS.gov provides more information about compliance.

For lenders, this has a few implications:
Public inquiry of the NMVTIS records are available.
DDI has chosen to use Auto Data Direct as a provider of NMVTIS inquiries and will be integrating those titling records with Premier eTitleLien™.

There are two main benefits to lenders. First, the NMVTIS records should show the most recent title issued as well as a history of other titles (and states who issued them) for the VIN. Second, NMVTIS contains a record of all the brands (salvage, flood damage, etc) that have been applied to the vehicle and which state applied them. NMVTIS does *not* include lien information.

State processes may change slightly.
At DDI we have observe two significant impacts to lenders as states are complying with NMVTIS. First, NMVTIS has its own data requirements that may not match each state. For instance, different states have different kinds of vehicle brands, and there is not a national standard for brands. More significantly, the NMVTIS standard for VINs has resulted in some states changing the VINs on their titles. (Mobile Homes have VINs that do not match modern automobile VINs - they frequently are recorded as 12345678A&B which is invalid.) This can cause problems for lenders releasing liens or trying to find information about a title.

Second, implementing NMVTIS into the business process for the state may delay issuing a perfected lien by up to five days. Any title received from out of state should be checked against the NMVTIS record to check for issues. A state may choose to slow down the process to be sure NMVTIS was updated. This should help reduce fraud and errors when transferring titles between states.

For more information about how each state participates in the NMVTIS program, see the official NMVTIS website. For more information on how Premier eTitleLien™ helps lenders cut costs and reduce fraud, see our official website. ;)

Image: Give the Gift that Saves the Day

Premier eTitleLien Users Group Georgia Meeting

On January 21st we held the first meeting of what we are hoping develops into our Georgia Users Group for Premier eTitleLien™. (Our primary Users Group will have its fifth meeting on February 10th in Columbia, SC.) The Users Group President, Dara Biswell of Heritage Trust FCU, and Vice-President, Lisa Vandys of Carolina Foothills FCU, both attended along with several of our Georgia customers.

Prior to the Users Group, we held an information session for prospective customers about our ELT services with an emphasis on how the program works in Georgia. We reviewed a lot of the basics (cost savings, fraud reduction, fewer missed titles) and gave a brief demo of Premier eTitleLien™. We noted our experience working with lenders in the newly mandatory states of Pennsylvania and Louisiana and highlighted the ease of use of working with state ELT programs. Our attempt to demo the Georgia Title Check service didn't work. Live demonstrations are such wonderful things. :(

As part of this information session, and since we had several of our customers there, we offered a chance for them to share how they are using ELT and for anyone else to ask any questions. I was pleasantly surprised (as usually happens) by their praise. Two of our Georgia customers (Citizens Trust Bank and Augusta VAH FCU) also added their reflections about the program. I wish we had recorded it.

Lisa opened the Users Group meeting and Dara spoke about the mission, goals, and structure of the group. Ann Gunning (CIO here at Decision Dynamics, Inc.) gave an update on each state's ELT program, noting progress and goals for each of the states. I briefly (since I had given a full demo earlier) highlighted some changes users can expect in our next release. We also demonstrated the new GA Title Check (working this time!) confirming (with current Georgia titles) both an inactive lien and a lien correctly placed.

We then opened a discussion of support issues, problems, and suggestions.

• A suggestion came up that Premier eTitleLien™ could do a better job of highlighting which state issued the electronic title that was just received.
• I asked if anyone had any trouble with providing proof of lien to other companies. The only problems really seem to come from local entities, like local insurance agents, especially those not in ELT states.
• A desire for an ELT program in Alabama and North Carolina was mentioned.
• A question came up about Texas seeking approval to allow electronic signatures for title applications. We explained what we knew about the Federal regulation and Virginia's experience doing the same thing.
• We also briefly discussed the problem of customers claiming to have a duplicate title or of attempting to forge release documents, and the recent success in those areas due to the states' (SC and GA in this case) policies regarding ELT.
• We also mentioned that the new requirement that each state check incoming out-of-state titles against the NMVTIS database was slowing down the lien recordation process for those titles.

We'd love to have your feedback on any changes you'd like to see with ELT in your state or the Premier eTitleLien™ program.

Image: Oriental Poppies by Georgia O'Keefe

California: DMV Offices Experience Network Outage

As reported by the AP, all the DMV office branches in California were unable to connect to the central computer system, preventing them from processing paperwork. A report by CNET clarified that computers were down for about two hours due to a router glitch.

The CA DMV did the sensible thing and continued to process work from customers by hand until access to the system could be restored.

California's budget struggles have resulted in reduced hours at all DMV offices and the closure of several others. The DMV is encouraging use of their online services and providing the option to schedule appointments up the 45 days ahead of time. Penalties are currently being waived until the next business day for due dates that fall on an "offices closed" Friday.

Other state DMVs are also feeling budget-related strain. Wisconsin has reduced hours at most DMV locations and has scheduled office closings for employee furlough. Louisiana is also considering ways to implement mandatory budget cuts without reducing office locations or hours.

Image: from Portola Redwoods State Park

Georgia ELT's best features

We're heading to Georgia today to host another "Open Forum" and participate with our users at the GA Users Group meeting (both are January 21, 2010 - missed them? Join us for our SC Users Group meeting on February 10, 2010). You can always find our upcoming events at http://etitlelien.com/events.aspx.

Our customers have been participating in the ELT program in Georgia since July 2008. Any state ELT program has significant benefits to lenders, but each state has it's own "specialties". We're working with each state to take their best ideas and get other states to incorporate those as well.

Georgia ELT's best features include:

• Requiring electronic release for electronic titles. This is not unique to Georgia (Florida and Louisiana also require electronic release) but is not a common restriction. This requirement is a significant fraud prevention measure.


• Conversion of Paper Titles to Electronic Titles. Georgia is the simplest program to work with by far, integrating this feature into their standard ELT process.


• *New* The GA DOR has made a title inquiry service available for lenders to inquiry on the status of their liens. This is an excellent research tool for lenders, helping to prevent fraud and reduce inquiries with the Motor Vehicle Division.

As with all other states, signing up to participate with Georgia is free of charge and an excellent way to making managing titles easier.

Image: Thronateeska Heritage Center, GA by Brown's Guides