SACRAMENTO — DMV Information Sold Illegally, State Audit Finds
Agency Also Reaped Profits by Overcharging Clients
Thursday, July 3, 1997 · Page A19 ©1997 San
Francisco Chronicle
Greg Lucas, Chronicle Sacramento Bureau
Sacramento
The Department of Motor Vehicles illegally sold the confidential
addresses of private citizens, according to a new state audit that also
found the agency overcharged nearly $100 million to companies that made
legitimate requests for driver and vehicle records.
The state audit, conducted at the request of the Legislature, found
that over the past six years the DMV has dramatically overstated its
costs for selling information to private companies while giving the same
information to government agencies for free.
While the excessive fees were paid primarily by banks, insurance
companies and lawyers, they are likely to be reflected in the rates those
firms charge customers.
Perhaps the most startling revelation in the 35-page audit was that
the DMV sold Safeway Inc. a list of 1,000 confidential addresses of
drivers parked in the lots of two rival supermarkets. During the $5,000
transaction, the DMV failed to obtain the required written promise from
Safeway not to use the information for direct marketing.
“The department did not comply with the law,” the audit said of the
Safeway transaction. “(It) may have jeopardized the privacy of
individuals who were the subjects of the information and exposed them to
the risk of unwanted or unsolicited contact.”
Debra Lambert, a spokeswoman for Safeway, said the company used the
information for marketing research. “It’s a statistical type of analysis.
What it does is help define trading areas around our stores and around
competitor stores. It’s a data-gathering exercise.
“It’s only addresses,” she added. “We keep the data to ourselves. It
is never divulged outside of the company.”
The DMV said the October 1994 Safeway transaction was one
“deficiency” in the 50 to 70 requests for information studied by state
auditors. Auditors, however, said they examined only a fraction of the
“tens of thousands” of transactions conducted by the department over the
past six years.
Under a 1990 law, residential addresses maintained by the DMV are
confidential unless the requester proves the information is needed for a
legitimate business reason. Even then, no names can be revealed, and
purchasers must promise not to use it for direct marketing.
An “alert auditor” stumbled across the Safeway transaction while
going over the DMV’s books to see whether the prices charged private
companies for driver and vehicle information reflected the department’s
costs of providing the information, said State Auditor Kurt Sjoberg.
Overall, the audit found that the department had “significantly
overestimated” its costs — creating a profit of $99 million over the
past six years at the expense of insurance companies, lawyers, banks,
credit unions and trucking firms that buy information from the DMV.
And, the audit said, since the costs were calculated incorrectly in
the first place and have not been corrected in six years, the department
cannot “assure the fairness of its fees nor can it properly identify or
manage product profitability.”
Said Sjoberg in an interview:
“We were asked to see whether fees charged for information products
relate to costs of providing those products. The DMV has turned it into a
different discussion. They’re saying they should be able to charge
whatever the market will bear for a product the state has a monopoly
on.”
Profit is legal and necessary, the DMV said in its response to the
audit’s findings. Revenue is needed to defray the costs of providing
records on vehicle ownership, driver status, traffic accidents and
convictions to law enforcement and other government agencies for
free.
“Reducing the fees and therefore the profits currently charged could
shift the costs from fee paying customers, such as insurance companies,
to the general public through increased fees for driver licenses and
vehicle registrations,” the department concluded in its four-page
response to the audit.
Governor Pete Wilson and the DMV are trying to jack up those fees
anyway to fill a $41 million deficit in the sprawling agency’s
budget.
In his May revised budget plan, Wilson backs increasing vehicle
registration fees by $1 to $30 a year, increasing title transfer fees
from $10 to $15 and charging people whose licenses are suspended or
revoked $55 instead of $15 to have them reinstated.
Every owner of a vehicle — there are 27 million registered in the
state — will feel the $1 hit in registration fees.
The state estimates there are 3.8 million title transfers a year and
400,000 Californians requesting their licenses be reinstated.
The fee increases are needed, the GOP governor argues, because the DMV
is $41 million in the red.
Although the audit found that the prices some customers were paying
far exceeded the department’s costs, other charges for information were
dramatically less than actual costs. In one case, the audit found that
the department charged $70 for a statistical report costing $1,000.
