Texas DMV littered with deficiencies, conflicts of interest

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Texas DMV

A state review of the Texas Department of Motor Vehicles finds numerous deficiencies, including a lack of “oversight and enforcement mechanisms needed to better protect the integrity of state vehicle titles and registrations,” making the fraudulent sales of cars damaged from recent hurricanes more possible.

The report from the Sunset Advisory Commission also notes that the nine-member board of the DMV is composed of four individuals from the auto industry, which the board regulates.

“With an industry-dominated board and an industry member serving as chair, the board lacks a strong objective voice to help mediate business disputes among industry members and stakeholders,” the commission writes.

The DMV was created in 2009, breaking it off from the Texas Department of Transportation. The department’s tasks include regulating auto dealers and overseeing the bus and truck industry, as well as ensuring motorist’s records are in order.

Without strong tracking of vehicle registration numbers, titles and registrations, unscrupulous used car dealers are able to sell cars damaged by floods.

“Title fraud not only risks financial harm but endangers the public by allowing potentially dangerous vehicles to remain on the road,” the report states. Among the remedies, the commission suggests mandatory fraud training for individuals handling title and registrations.

To address the panel’s composition, the commission recommends replacing one of the dealer members with a regular citizen. It is also suggests that the governor appoint a chairman from among the non-industry members.

Currently three members on the board are auto dealers, including chairman Raymond Palacios Jr., while a fourth owns a trucking firm. The fear is that the board will serve as a rubber stamp for the dealer industry.

Texas is one of six states in the U.S. with tough restrictions on buying a car, as Tesla discovered when it tried to use its storefront model to sell cars here.

As the politicians grappled with the notion, a spokesman for the DMV told a reporter that Tesla should just play ball with the dealer model instead of trying to cut out the middleman: “Our dealer network community would probably tell you that the application process is actually very easy to maneuver,” said Daniel Avitia, director of the motor vehicle division for the Texas Department of Motor Vehicles.

Tesla has failed in its efforts to sell its cars through its stores in Texas.

Politicians have long protected the dealer model thanks to the strong lobbying and campaign financing from dealers and their state and national associations.

The powerful franchise laws that protect dealers are part of what the DMV upholds. The laws were tightened nationally in the early aughts when the Internet began allowing consumers access to data like invoice price and cost to dealers, leveling the playing field and threatening profit margins.

Placing key industry members on motor vehicle-related state boards has already shown to be costly to taxpayers in promoting industry interests.

Former DMV board chairman Victor Vandergriff, now a TxDOT commissioner, used his role at TxDOT, as well as taxpayer resources, to promote the interests of a string of dealerships owned by billionaire Warren Buffett.

Steve Miller can be reached at [email protected].

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