There have been a couple of attempts to digitize vehicle titles. One initial motivation to do so was to combat vehicle theft — the No. 1 property crime. Congress passed the Anti-Car Theft Act in 1992, and then amended it in 1996, to address issues like thieves selling stolen vehicles in different states under new titles by authorizing the U.S. Department of Justice to establish a national system for exchanging information about vehicle titles.
This system, the National Motor Vehicle Title Information System (NMVTIS), is designed to prevent the sale of stolen vehicles, protect consumers from fraud and keep unsafe vehicles off the roads. While NMVTIS remains a DOJ program, it is operated by the American Association of Motor Vehicle Administrators, a nonprofit organization representing states, provinces and territories in the U.S. and Canada that administer and enforce driver and motor vehicle laws. Various public and private entities are required to report information to NMVTIS, including state vehicle titling agencies, insurance companies, and junk and salvage yards, and law enforcement agencies and others can use the database to address vehicle crime.
Unfortunately, while states have digitized the process of sharing vehicle title information electronically through NMVTIS, most still maintain and produce the actual vehicle titles as paper records. Only approximately 20 states offer e-titles where the title itself is fully digital, and even in most of these cases, its use is often voluntary and states will revert to paper titles for many transactions.
As with many other efforts to digitize previously paper-based processes, e-titles offer a number of benefits. For one, e-titles can reduce administrative costs for all parties — including dealers and state agencies — because they do not have to process, file, store or mail paper documents. In addition, using e-titles can streamline document handling, allowing faster processing instead of tedious paperwork, and decrease the risk of forgeries, reducing the risk of fraud.
For example, when a consumer buys a car at a dealer, and uses dealer financing, the dealer puts a lien on the vehicle until it has been paid off. In the past, this task might require a fair amount of paperwork, with the dealer mailing documentation to the state agency, the state agency processing these documents, sending back a notice, and then when the buyer pays off the loan, repeating the process all over again. Not surprisingly, mistakes are common, which wastes time and money for all parties. E-titles streamline this process, so that with a few clicks, a state can issue a title to the lender electronically and then, once the buyer has paid off the loan, the lender can notify the state to release it to the buyer. No more lost mail, no more rooms full of file cabinets.
Unfortunately, e-titles are not always as convenient when consumers want to buy and sell their vehicle themselves. Instead, most states offering e-titles provide consumers a paper title upon request that they can then use to transfer ownership. While the process is not terribly complicated, it is unnecessarily slow and expensive (mainly for the owner who must pay printing and processing fees). Moreover, given that the title is already available in a digital format, owners should be allowed to transfer it electronically. However, to make this possible, especially for out-of-state vehicles, state agencies will need to focus on building a secure, consumer-friendly digital experience and working across state lines to ensure interoperability.
Unless states force themselves to innovate, consumers will find in the coming years that the transition to connected vehicles will have modernized virtually all aspects of owning and operating a vehicle except for the old-fashioned paper titles.
