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Consumer Banking and Payments Law: 4.11.1 General

Check-cashing companies are very popular with consumers, especially low-income consumers who do not have accounts at banks. They also are used by many consumers with bank accounts because of their convenience. For example, many companies that cash checks also offer other financial services and products such as money orders, wire transfers, and short-term loans. Convenience stores also install ATMs at which consumers can cash checks.

Consumer Banking and Payments Law: 4.11.2.1 Types of Regulation

Many states require check-cashers to obtain a license.606 For example, the Uniform Laws Commission (ULC) has adopted a Uniform Money Services Act, which requires most check-cashers to be licensed.607 Under most state statutes, to obtain a license, the check-casher must file an application fee and meet minimum requirements for competency, integrity, and financial wherewithal. Applicants with felony convictions are often disqualified.

Consumer Banking and Payments Law: 4.11.2.3 Substantive Requirements

To provide consumers with basic information, some statutes require check-cashers to prominently post the fees they charge for the service. The law may require the notice to be in Spanish as well as English. The notice may also require information about how to file a complaint against the check-casher. Some statutes also require the check-casher to post a copy of its license or registration certificate.

Consumer Banking and Payments Law: 4.11.2.4 Private Remedies for Violation of Check-Cashing Statutes

States impose both civil fines and criminal penalties for violation of the statutory requirements governing check-cashers, but often provide no private right of action. On the other hand a few statutes explicitly authorize a private right of action for consumers.618 Even if a statute does not contain an explicit right of action, consumers may be able to sue based on a violation of the state UDAP law.

Consumer Banking and Payments Law: 4.11.3 Gramm-Leach-Bliley and USA Patriot Acts

The privacy provisions of the Gramm-Leach-Bliley Act620 require financial institutions to have a privacy policy that is disclosed to consumers with whom the institutions have established customer relationships. In addition, if the institutions share non-public personal information with non-affiliates, they must provide consumers with an opportunity to opt out, thereby preventing the institutions from sharing the information.

Consumer Banking and Payments Law: 5.1.1 Topics Covered in This Chapter

This chapter examines electronic transfers from and into the consumer’s bank account, generally covered by the Electronic Fund Transfer Act (EFTA) and Regulation E, including rules on the issuance of ATM and debit cards and other access devices, disclosure requirements, authorizations for transfers, consumer liability for unauthorized transfers, procedures to resolve errors, other requirements for electronic fund transfers, and consumer remedies.

Automobile Fraud: 2.3.3 AutoCheck

The credit reporting agency Experian offers a vehicle history service called AutoCheck.136 Its data comes from automobile auctions, consumer protection agencies, automobile dealers, U.S. and Canadian motor vehicle departments, and other state agencies. It claims to receive data from most of the automobile auctions in the country.

Automobile Fraud: 2.3.4 The National Motor Vehicle Title Information System

The National Motor Vehicle Title Information System (NMVTIS) is an important vehicle information database, particularly concerning a vehicle’s salvage or insurance total-loss history. The Anti-Car Theft Improvements Act of 1996 mandated that a system be in place by December 31, 1997.137 But limited progress was made until a 2008 court order required the Department of Justice to proceed.

Automobile Fraud: 2.3.5 Information Sources for Canadian Vehicles

One of the larger vehicle history providers in Canada was CarProof. In 2018 CarProof changed its name to Carfax Canada.142 Both Carfax and the former CarProof are owned by IHS Markit. Another company, A Plus Registry Services, retrieves title and registration documents in Alberta for a fee.143

Automobile Fraud: 2.3.6 Insurance Databases

A great deal of prior wreck damage will not be revealed by a summary title report, especially if the amount of damage fell below the threshold required for a salvage title. Insurance companies, however, keep detailed records of all claims, and pool this information in a database maintained by ISO (Insurance Services Office, Inc.).144

Automobile Fraud: 2.3.7 Other Quick Search Procedures

A number of services do not maintain databases, but instead contact the relevant DMVs about a vehicle after a request is made on that vehicle. These services can either provide a summary report or obtain the actual documents. Because they can provide detailed title histories, they are described in § 2.4, infra.

Automobile Fraud: 2.4.1 Introduction

The various titles and other documents evidencing a car’s history are often key to discovering exactly how a car’s history differs from that represented by the dealer. The detailed title history is often more revealing than the summary title history described in the prior section. Not only is there no substitute for obtaining copies of the actual records to determine if there have been alterations, forgeries, information left blank, and other problems, but the actual records will show the names and addresses of prior owners.

Automobile Fraud: 2.4.2.1 General

Each state has enacted a certificate of title act that requires that whenever someone purchases a car for use (as opposed to for resale), that purchaser must obtain a certificate of title or a certificate of registration in their own name. Those obtaining possession of vehicles with the intent to resell them do not have to obtain new titles in their own names, but may do so if they wish.

Automobile Fraud: 2.4.2.2 Information Found on the Title

The title will generally include the name of the jurisdiction and the phrase “certificate of title” at the top center of the form. Below that will be printed the vehicle identification number (VIN),152 the year and the make, model, and body type. Also listed will be the owner’s name and address, the lienholder’s name and address, a line for the lienholder’s release, odometer information at the time the title is issued, and any brands (such as salvage, rebuilt, duplicate title, lease, unknown odometer mileage, lemon buyback, prior taxi).

Automobile Fraud: 2.4.2.4 How the DMV Stores Title Information

The state DMV retains information for all titles issued in that state and certain other documents as well. The DMV information is limited to titles issued in that state, but the DMV will have information on the prior state if the car was previously titled in another state, because the out-of-state title will have to be presented to obtain a new title.

The DMV usually maintains certificates of title under one or more of the following systems:

Automobile Fraud: 2.4.3 Electronic Titling

A number of states have converted portions of their titling systems to allow for the use of electronic format liens and/or titles. In 2019, in a long-awaited final rule, the National Highway Traffic Safety Administration (NHTSA) established federal standards for electronic titling and electronic title disclosures. The rules came in response to years of growing demands from Congress, the states, industry participants, and others for standards to allow the use of electronic titles and liens by the states.

Automobile Fraud: 2.4.5.1 Reviewing the Consumer’s Own Signature on the Old Title

The client obtained a new title for the subject vehicle after the car’s prior title was submitted to the department of motor vehicles (DMV). This old title may prove a critical piece of information for the investigation. One reason the old title is important is that the client’s own signature should be present on that title.

Automobile Fraud: 2.4.5.2 Names and Addresses of Prior Owners

Prior owners listed in the title history can provide critical information about the car’s history, especially concerning physical damage, mechanical defects, and mileage. While practitioners have reported varying success in contacting prior consumer owners, quite often consumers are only too willing to discuss their old cars and problems they had with those cars.

Automobile Fraud: 2.4.5.3 Odometer Discrepancies

A complete title history will include a large number of odometer readings and disclosures found on the titles, reassignment documents, powers of attorney, odometer statements, and other documents. Sometimes the numbers will be internally inconsistent or at least suspicious. For example, a reading at a later date that is lower than at an earlier date indicates a problem. Other times the increase in mileage over time is far less than predicted by normal use.

Automobile Fraud: 2.4.5.4.1 General

There are two key indicators to look for in a title search to identify salvage and similar wreck or flood vehicles. The first is a salvage title or title brand on a regular title indicating such a vehicle history, even if that brand only appears on an earlier title in the title chain. The other is the appearance of the name of an insurance company, body shop, or junk yard as a transferor of any title in the chain, or on a title’s assignment line, or in a reassignment document. In general, insurance companies will take ownership of such vehicles as part of an insurance claim settlement.

Automobile Fraud: 2.4.5.4.2 Understanding salvage brands

It is not always easy to identify an insurance company’s name on a title document, and it may be even more difficult to translate the salvage brand. One study found thirty different terms used by the various states to deal with salvage issues:

Automobile Fraud: 2.4.5.4.3 When salvage brand still on the new title

If the brand appears on the title the consumer retains, or on the title the consumer received from the dealer, then it is clear the dealer knew about the salvage history when it sold the car to the consumer. Investigate whether the dealer told the consumer about that history, whether the dealer made it difficult for the consumer to see the title, whether the brand was a meaningful word or a cryptic abbreviation, and whether the consumer should have noticed that brand on the title.