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Transportation Bill Paves the Way Toward Digital Vehicle Transactions

December 14, 2015

By Eric Gandarilla

WASHINGTON, D.C. — Billed as a down payment for building a 21st century transportation system, the recently passed Fixing America’s Surface Transportation Act, or Fast Act, contains a provision that clears a key hurdle in the industry’s drive toward a fully digital transaction.

Inside the 1,300-page bill President Obama signed into law on Dec. 4 is language that allows states to begin digitizing odometer disclosures, notices and related materials. The language’s inclusion also means states will no longer have to apply to begin accepting electronic signatures on odometer disclosures — a cumbersome process that took years to complete and often didn’t result in approvals.

The law, which will also direct $305 billion in funding toward transportation projects over the next five years, places the responsibility on states to implement appropriate data authentication and security measures.  John Brueggeman, an executive with the Motor Vehicle Software Corp. — a Southern California-based firm founded in 2005 to help states modernize the vehicle registration process — said the e-odometer language removes a key deterrent for states looking to go paperless.

“The paper registration process is outdated,” Brueggeman said. “We live in a digital economy and this new law will not only allow for a faster and more convenient process for automobile buyers, it will also increase accuracy and efficiency at state motor vehicle departments across the county.”

F&I managers should expect immediate benefits once states move to electronic signatures for odometer disclosures, Brueggeman said. They will no longer have to mail handwritten disclosures to the DMV, nor wait for the DMV to receive and manually process the documents before mailing back verifications.

In states that move to electronic disclosures, Brueggeman said dealers will receive immediate confirmation once they input a customer’s signature into their database and then electronically submit it to the DMV. The time saved, he added, should allow F&I managers to spend more time presenting and selling their products to more customers.

“We know that in our business, sending paper to the DMV and back to the dealer was not adding any value in the process of selling a car. It was simply taking time,” Brueggeman said. “The focus for us was to make it more efficient, more transparent, and faster.”

The e-odometer provisions should also help reduce odometer fraud, as the information dealerships enter into a state database will become permanent record. And, if an odometer is altered, there will be a record of that change as well. Either way, Breuggeman said, electronic signatures offer a form of transparency paper can’t match.

“The amazing thing about digital is that we always have a record of what happened and when it happened,” Brueggeman said. “And so you can’t always prevent fraud, but at least this [digital] gives investigators a better chance to track it.”

States have, for the most part, embraced the move to a paperless transaction, with California being the first to adopt electronic lien and titling in 1989. Today, 24 states have implemented some sort of electronics titling program, with five additional states looking to pass legislation that would allow them to digitize the titling process.

The last hurdle was digitizing the federal disclosures. A provision was included in the 2012 federal transportation bill that directed the National Highway Traffic Safety Administration to develop rules to allow for electronic odometer disclosures, but the agency has yet to propose those rules. The 2016 transportation bill means states no longer have to wait for the agency to act.

“The e-odometer language included in the transportation bill removes one of the last major impediments to fully electronic consumer vehicle purchase transactions,” said Brian Maas, president of the California New Car Dealers Association in a press release. “This opens up the field for entrepreneurship and innovation for dealers to move from paper-based transactions to an electronic transaction system.”

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