eOdometer Disclosure Law Could Make Paperless Auto Sales Real

State and federal laws long ago cleared the way for the use of electronic records and electronic signatures in most areas of commerce. But auto dealers, for the most part, still conduct sales using paper documents. That could soon change with the passage of the next federal highway bill, which contains language that paves the way for electronic odometer disclosures. It’s been a long journey, but this critical change could ultimately pave the way for completely paperless auto sales.

When Congress passed the Electronic Signatures in Global and National Commerce Act (ESIGN) in 2000, it opened the eCommerce floodgates. eSign put electronic commerce on a level playing field with brick and mortar businesses because it made electronic contracts, agreements and signatures equally valid to paper agreements.

By 2006, six years after Congress passed eSign, the annual business-to-business eCommerce volume in the United States was $2.7 trillion. By 2013, the latest year for which statistics were available, that number ballooned to more than $5.2 trillion.

But a gap in federal law has hampered auto dealers’ efforts to move toward fully electronic vehicle sales and registration. That’s because eSign didn’t address odometer readings, and to this day state and federal laws require nearly all odometer readings at the time of sale to be recorded on paper. That’s left auto dealers in the past as far as online sales, titling and registration.

eOdometer language contained in the pending federal transportation bill would finally bridge that eCommerce gap by allowing states to provide electronically- created odometer disclosures, notices and related materials as the feds finish writing guidelines for these new transactions.

“Once we get this language in place auto dealers will be able to sell vehicles completely electronically,” said former Montana State Sen. John Brueggeman, Executive Vice President of Motor Vehicle Software Corporation (MVSC), the leading provider of electronic vehicle registration services in California and other states.

“The paper registration process is outdated,” Brueggeman added. “We are in a digital economy and this will not only allow for a faster and more convenient process for automobile purchasers, but will also increase accuracy and efficiency at motor vehicle departments nationwide.”

MVSC, along with the National Automobile Dealers Association and auto dealers associations from throughout the country, worked with U.S. Sen. Steve Daines (R- MT) to get the language included in the Senate transportation bill.

“It has been nearly two years since the Department of Transportation was required to issue new rules for electronic signatures,” Daines said. “This provision simply allows states to voluntarily proceed with their own odometer disclosure programs, as long as their processes provide equivalent security to the current paper and ink process.”

Brueggeman said Daines, a former technology executive, took the eOdometer issue seriously from the get-go.

“You often hear legislators talk about business and talk about technology, but very few of them actually understand how to really improve the climate for business and technology,” Brueggeman said.

The eOdometer language is contained in the highway bill that passed the Senate earlier this year, but the language is not currently in the House version of the bill. The highway bill is in conference, and Brueggeman said he expects the language to make it into the final bill.

There is a strong desire by many lawmakers in Washington to get a transportation bill passed soon, and Congress is expected to vote on the final bill before the end of the year.