The art of vehicle identity cloning is not new to the law enforcement community or the insurance industry. A specific method of vehicle cloning, salvage switching, dates back to the early 1970s, when salvage switching was used to hide the identities of stolen vehicles from law enforcement, insurance companies, departments of motor vehicles, and the public.
In response, the National Auto-mobile Theft Bureau, the predecessor to the National Insurance Crime Bureau, and the insurance industry began to track salvage vehicles by building a salvage reporting system. Insurance companies and salvage pools began reporting vehicle salvage information to NICB’s database. Years later, salvage switching to hide the identity of stolen vehicles and other vehicle-related crimes have been slowed due to the databases created and managed by the NICB.
In addition, in 1989 and 1992, the Federal Anti-Car Theft Act was created and enhanced, respectively, to protect consumers from vehicles that were not roadworthy and to help law enforcement fight vehicle theft by limiting the potential for title washing. Title washing occurs when a salvage designation is removed from a title by moving the title of a vehicle from one state to another without carrying its prior salvage history forward. The Anti-Car Theft Act mandated the creation of a database, the National Motor Vehicle Titling Information System, to resolve this problem.
Nonetheless, vehicle theft remains a high-profit, low-risk criminal enterprise, costing approximately $8 billion in the United States annually. Organized criminal groups have adjusted their methods of operation to keep up with legislation and law enforcement efforts. In the past, some thieves just made up VINs, that is, a 17-digit number that conformed to a specific algorithm, or they used VINs from salvage vehicles.
The salvage problem has been addressed with the NICB databases, so now scam artists have resorted to cloning VINs from vehicles with no adverse histories to create duplicate identities for stolen vehicles or to create “paper cars,” vehicles that exist only on paper. This is accomplished by creating duplicates of VIN plates, federal safety labels, part-marking labels, and the necessary paper work to title and register cloned vehicles or paper cars.
Once a thief has this information in hand, a like vehicle is stolen and its identity is changed to that of the donor vehicle. The clone then is titled and registered, most likely in a different state, and is sold, sometimes to an unsuspecting purchaser. If a paper car is created, it most likely is used in an insurance fraud scheme, such as a phony vehicle theft claim, garage-keepers’ liability claim, or paper vehicle accident.
Conquering the Clones
One would surmise that the easy defense to vehicle cloning lies with the necessary paper work and processes that allow vehicles to have the same identities. Armed with that assumption, the North American Export Committee (NAEC), a not-for-profit coalition of law enforcement, and the insurance, rental car, and vehicle finance industries have joined forces with the NICB, Insurance Bureau of Canada, Coordinating Office of Insured Risks of Mexico, and custom departments of the United States, Canada, and Mexico. With the cooperation of the American Association of Motor Vehicle Administrators, the groups hope to complete a database mandated by the Federal Anti Car Theft Act in the United States, and to connect the system to the countrywide registration networks in Canada and Mexico. By combining resources and information, it may be possible to prevent what we have already discovered, cloning across our borders.
Cloning vehicles using VINs from other countries makes thieves’ jobs much easier, because they know that titling and registration are not being tracked in the United States from state to state, and certainly not across national borders. This creates a similar dilemma for both Canadian and Mexican law enforcement and motor vehicle administrators, as well.
Once NMVTIS is implemented in the United States, it is important that it be connected to similar databases in Canada and Mexico to create the North American Vehicle Document Security Project. This network will limit thieves’ access to appropriately titled and registered VINs to be potentially cloned from other countries. The NICB indicates that there are possibly 50,000 cloned vehicles in the United States; however, AAMVA believes that, because VIN cloning is so difficult to detect, this number could represent just the tip of the iceberg.
“Vehicle cloning is in its infancy, as evidenced by the number of cases that are being investigated,” said Lieutenant Greg Terp, commander of the Miami Dade Police Department Auto Theft Unit and chairman of the NAEC. Terp’s unit recently completed a vehicle theft investigation that brought national attention to the subject of vehicle cloning. The case, Operation Roadrunner, “is a good example of how proceeds from the theft and cloning of vehicles can fund organized criminal activities, including terrorism,” said Terp.
What needs to be done to eliminate vehicle cloning? NMVTIS should be implemented as mandated by the Federal Anti Car Theft Act, which means full participation by all 50 states. Currently, only 26 states are participating at some level. Once NMVTIS is fully operational, it should be linked to the registration network in Canada and the database in Mexico to complete the vision of the NAVDSP.
Most importantly, the Federal Anti-Car Theft Act should be updated to designate vehicle cloning a specific federal crime. Titles for all vehicles exported should be “killed.” In addition, federal funding must be made available to critical states to participate in NMVTIS and to connect NMVTIS to Canada’s IRE and Mexico’s RENAVE systems.
James S. Spiller is vice chairman of the North American Export Committee and interim president and CEO of National Vehicle Service.