MO Bill Would Make it Easier to Chop/Crush Cars - With No Notice to Your Member or the CU
Missouri credit unions are speaking out against a bill in the Missouri Senate that would make it easier for salvage yards to scrap vehicles with no notice to your member of the credit union. On February 8, MCUA Chief Advocacy Officer Peggy Nalls and Missouri Electric Co-op Employees Credit Union CEO Randy Marks testified against SB 633. The bill would eliminate the need for a title to be presented to a salvage yard before a vehicle could be sold for scrap or salvage. A tow company or scrap hauler would need only a state ID and a bill of sale to sell the car to the salvage yard if the car is more than 10 years old.
"Our credit union is currently searching for a 12-year-old vehicle that was used as collateral for a loan," says Marks. "Even though our lienholder information had been properly filed, we believe the car was salvaged. I was very concerned that legislation was introduced which would eliminate proper titling procedures and thankful that I had the opportunity to testify against this bill."
Nalls and Marks testified that not only are there issues with the proposed bill to allow all cars over 10 years old to be sold with a state ID and bill of sale, there are significant problems with the statute as it is now. Regarding cars 10 years or older, one Jefferson City area credit union has 597 active loans on the books for cars more than 10 years old and a St. Louis credit union reports 429. The model year does not determine if a car can be considered junk.
Current law requires the original title, or a junk or salvage title as well as lienholder notification before the vehicle can be sold to a salvage company. There are currently numerous examples of fraud and theft. When credit unions were asked to weigh in on the bill last week, many reported that they experience situations where vehicles have been stolen and impounded, abandoned and impounded, or sold to the salvage yard because the owner wanted cash. And the credit union would not have known without the current requirement for a title search with notification to lienholders before a vehicle can be destroyed.
Randy Marks testified that he is currently researching a situation where a member’s car was left on the side of the highway and was damaged according to a police report. A tow company was called, but from that point, the car could not be found. Missouri Electric Co-op Employees Credit Union had insurance on the vehicle but is having difficulty getting the claim paid because they cannot determine exactly what happened to the vehicle.
Also testifying at the hearing were lobbyists and two salvage companies who say they support SB 633 because they need to process the vehicles and “don’t have room” to store them. According to Nalls, two legislators have large salvage companies in their districts, and they are being told about all the problems with getting rusted out vehicles removed from farm fields. "They are conveniently ignoring the real possibility that if requirements to salvage a vehicle are so lax that only an ID and bill of sale are required, the salvage companies can absolve themselves of all responsibility if there is an owner who had a car stolen or a credit union with a lien," says Nalls.
Credit unions were the only group standing up for consumers during the SB 633 hearing. The bill sponsor, Sen. Kevin Engler (R-District 3) has asked representatives of interested parties to meet early the week of February 13 and hopes to have compromise language to vote out of committee on February 15. “Credit unions will be at the table, and if necessary, we will ask Missouri’s credit unions to weigh in with their senators on the issue,” says Nalls.
In South Carolina there is a law with language similar to language in SB 633. The South Carolina law allows cars to be salvaged with a bill of sale if the car is more than eight years old. Due to all the problems experienced in South Carolina, the South Carolina Senate is working on a bill this session that would require titles, impose penalties and make it tougher for an individual’s car to be towed, sold and chopped. “With proof in another state that what the salvage companies are proposing encourages theft, why would Missouri want to eliminate the consumer protections we have now?" says Nalls.