NBC 5 investigation uncovered new evidence showing that senior officials at the Texas Department of Motor Vehicles were tipped off two years ago about a major security flaw in the system that issues temporary license plates, but the DMV has completely denied it. closed this loophole only last month, a few days after we asked Why.
The security flaw in the system for issuing temporary license plates has allowed scammers to create paper plates for cars that shouldn’t be on the road.
Officials investigating label fraud complain that the DMV’s lax security and oversight has allowed criminals to obtain dealer licenses, infiltrate the DMV system and create a huge black market for the sale of labels. paper labels.
A unit of Travis County constables leading the state’s efforts to combat fraud now says a third of all Texas temporary tags issued last year, more than 1.2 million, were created by resellers they investigated for fraud, and that the crooked resellers earned more than $64 million. sell labels last year only.
In a December interview, Whitney Brewster, executive director of DMV, acknowledged a significant security flaw in the system used by car dealerships to print temporary labels.
“We have a system flaw,” Brewster said at the time.
CRIMINALS INFILTRATE THE STATE LABEL SYSTEM
This flaw has allowed rogue dealers to obtain thousands of temporary tags using obviously fake vehicle identification numbers.
If wrong, even a novice could spot them.
Many VINs contained special characters like periods, dollar signs, and exclamation points at the end of VIN numbers. Car VIN numbers do not have special characters.
Police showed NBC 5 how a small car dealership suspected of large-scale fraud created 13,000 tags using fake VIN numbers, and DMVs webDEALER|eTAG system did not stop them.
The police said NBC 5 investigation this particular dealer is one of many who printed labels and sold them illegally for a profit on a huge black market.
When NBC 5 investigation confronted Brewster about the security breach last month, she said her agency would act quickly to fix the system.
“It doesn’t stop special characters. It is this defect that is currently being worked on and the fix for this defect will be implemented as soon as possible,” Brewster said.
In a new statement to NBC 5 investigation four days after that interview with Brewster, the DMV said the department “…implemented a technology update on December 6, 2021…”
The agency said the security issue was “…identified in late November.”
But four Texas law enforcement officials who spoke to NBC 5 investigation said they notified the DMV of the security breach two years ago.
“We told them outright in 2019,” said Central Texas sheriff’s deputy David Kohler.
Kohler is one of the officers who met with top DMV staffers in December 2019.
NBC 5 investigation obtained a recording of the 2019 meeting of Sgt. José Escribano, investigator of the Travis County Constable’s Office who also attended the meeting.
In the recording, several officers, including Kohler and Escribano, question why the DMV system doesn’t stop people from using fake VIN numbers to get tags.
“The system will allow you to generate a buyer’s tag with that incorrect VIN,” Kohler explains in the recording.
A police detective tipped off the DMV that he was seeing tags issued to fake VINs with dots.
“Certainly they shouldn’t be able to put a punctuation mark in there after the VIN for a motor vehicle,” said Capt. Ed Martin of the Vidor Police Department.
DMV HAS THE ABILITY TO PREVENT FAKE WINES
According to the audio, several senior DMV officials attended the meeting. Including Jeremiah Kuntz, who at the time was director of the department’s title and vehicle registration division. In the recording, Kuntz said the DMV has the ability to prevent fake VINs from entering the system.
“We could lock that down,” Kuntz said.
However, Kuntz said, when they tried to tighten security, car dealerships complained.
“Usually when I turn them down I start to get pushed back to the other side of things because I have a very loud business industry that’s sitting on the other side,” Kuntz said.
In the audio, Kuntz said some unique trailers and vehicles may have unusual VINs containing more or fewer numbers and letters and that the DMV doesn’t want to make it too difficult for dealers to print labels.
But police are backing down, arguing that no one should be able to enter 18-character periods or VINs for cars that normally have 17 characters.
“There has to be a way to lock it in where you can’t put more than 17 in it for a motor vehicle and avoid the punctuation marks,” Martin said.
Kuntz told officers the DMV would need more money from the legislature to reprogram the system.
Kuntz has since left the DMV.
We contacted him by phone and played some of the audio from the meeting. He said he remembered the meeting but declined to comment on it and did not say whether he informed his boss, chief executive Brewster, of the issue in 2019.
NBC 5 asked to interview Brewster again. but the DMV staff wouldn’t allow us to talk to him.
A spokesperson told us that the DMV “…regularly works with our law enforcement partners…” and said, “Over the past few years, TxDMV has implemented many system enhancements.”
He said an upgrade in 2020 prevented manual entry of VINs with special characters into the system, but a flaw still allowed VINs with special characters to be added via a file upload.
This was fixed in December, closing the loophole that frustrated officers who had raised concerns years ago.
” I really do not understand. I don’t know if it’s incompetence, I don’t know if it’s incompetence or I don’t know if it’s a misunderstanding of what’s really going on,” Kohler said.
The police said NBC 5 investigation these periods and exclamation points were often added to VIN numbers by people trying to conceal salvaged or damaged vehicles that cannot be legally registered because they are unsafe.
Agents from the state’s main paper tag fraud unit say security breaches at the DMV have flooded Texas roads with so-called “ghost cars,” or cars with paper tags being sold by unscrupulous dealers who may enter false information into the state system, making it difficult for police to identify the true owner of a car.
“You have just given them an instrument to commit fraud. The State of Texas, the Texas Department of Motor Vehicle. Their system is ready and ripe for fraud,” Escribano said.
In December, the DMV boss agreed that tag fraud had become a crisis.
“It’s absolutely an emergency. We’re looking at every possible possible solution,” Brewster said.
The question now is, could more have been done to prevent this emergency years ago?
VIN NUMBERS ARE NOT THE ONLY DEFECT
The problems with the DMV’s beacon system go far beyond this single security flaw.
NBC 5 investigation‘Reports have shown how the DMV does not fully control who applies for a car dealership license. This allowed criminals to become authorized dealers, gain access to the system and earn millions illegally selling paper tags.
Dealerships are only expected to issue paper tags to vehicles they have actually sold and are not permitted to sell tags.
After NBC 5 investigation released a series of reports on the extent of the problem last fall, a DMV advisory panel recommended fingerprinting car dealer license applicants.
The DMV board will consider this recommendation later this month. The council is also considering new limits on the number of tags a dealer can issue in a calendar year.