Why Do Some Claims Personnel Question the Legality of VIN Labels? - BodyShop Business
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Why Do Some Claims Personnel Question the Legality of VIN Labels?

Some claims personnel question whether replacing VIN labels is legal. How can replacing something that we removed or are going to damage in our repair process be illegal?

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We have an occasional debate with insurance claims staff regarding the replacement of door or pillar VIN tags. The company that reproduces them for us does a great job and they look original, but some claims personnel are reluctant to pay for them and question the legality of the process. We replace any and all VIN tags on doors and pillars that we repair, replace or have to prime and paint around. We do get paid for them presently, but I do not want a legal issue to come up at a later date. How can replacing something that we removed or are going to damage in our repair process be illegal? By the way, this process also includes LKQ doors.

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Asked by Bruce Forgrave, owner, Forgrave Autobody LLC, Heath, Ohio.

Question answered by David Walden, E.C.S. Automotive.

We’ve had insurance agents say it’s illegal to put these on, and the thing I’ve always said is that they’re absolutely right. It is illegal for people to just go do this, just like it would be illegal for me to make money – that would make me a counterfeiter. If the U.S. Treasury makes money, they’re able to do it because they’re under that jurisdiction. If it was illegal for the label to be put on there, then why would they put them on there to begin with? That would mean that every manufacturer was doing something illegal, but obviously they’re not because they’re complying with the National Highway Traffic Safety Administration (NHTSA) law 567. Some people would say, ‘Well, body shops don’t have the right to put them on there,’ but that’s where we come in by being a licensed agent to the manufacturers with the same jurisdiction, and it doesn’t make us a so-called counterfeiter.

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There are a couple different aspects to this. No. 1, you have the initial laws set up by NHTSA in 1966. However, they didn’t come to fruition till 1969, and that’s where these door VIN certification labels came into play. And it’s a law. If you look under the NHSTA law Section 567, it has all kinds of guidelines spelled out on what an auto manufacturer has to do to be in compliance with these labels. So it started out relatively simple, but with liabilities and laws the way they are, it has taken on a whole different meaning now than it did during its original conception.

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As far as why replacing these labels is such a big deal, I don’t know if it’s so much that they’re being replaced as it is the way the laws are written. Every one of these laws is prefaced by if there is an intent to defraud or do something illegal. Then, it has a totally different meaning to it.

These VIN labels are the only labels on a vehicle that are federally mandated. All other labels on a car – warning labels, etc. – are a courtesy by the manufacturer and also a way for them to make sure they cover themselves liability-wise. But not only are they a safety label, they also have a lot of information on there specific to that vehicle, and there is no other label on the car like that. So you have a label that has federal implications. These labels are probably one of the first things the National Insurance Crime Bureau (NICB) will look at because they have the VIN on there and other identifiers specific to the vehicle – powertrain, color, trim codes, etc. I guess they don’t want people just making those things up, because that’s one of the first things these chop shops will do. They figure they’ll change the numbers on the body or paint something up. When I was dealing with the NICB, they said one of the easiest vehicles targeted for fraud was the Tahoe. They were making Escalades out of them, and one car was cloned 27 times. The impropriety and fraud out there was another reason E.C.S. Automotive was so diligent in getting licensed to make replacement VIN labels.

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It took us four and a half years of red tape to get licensed because of all those federal implications and liability. We even carry a $5 million liability with all of our customers and people as cowriters. You have these other companies out there that are not licensed to do this and basically they’re freelancing and bootlegging these things. These companies have no way to do checks and balances. But we, for example, are in the star system and thus are able to get proprietary information from the manufacturers. Plus, we have safeguards set up in our system where, if anything was to be typed in erroneously – for example, the wrong tire pressure – we get a warning signal that tells us that. This is all to make sure that when the shop puts that label on there, they’re not doing something that will get them in trouble.

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