Texas DMV Shuts Down Six More Dealers Suspected of Selling Paper License Tags

The Texas Department of Motor Vehicles shut down six more car dealers in the fight to stop the sale of paper license tags.

Just 13 days ago the DMV board authorized staff to immediately suspend the licenses of dealers suspected of illegally selling paper tags.

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In the short time since then, the agency's enforcement staff says it has already cut off a half dozen dealers so they can no longer get into the system, print tags and sell them for profit.

Before now, as NBC 5 Investigates has revealed in a series of reports, rogue dealers were able to print hundreds of thousands of tags before the DMV cut them off. The agency said it could not move faster to revoke dealer licenses until the legislature gave the agency that authority and the board implemented new administrative rules which just recently went into effect.

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DMV executive director Whitney Brewster resigned Monday in the wake of the NBC5 reports and questions from law enforcement and the DMV board about whether the agency could have moved faster to stop the fraud.

The agency's new interim executive director, Shelly Mellott, listened Wednesday as DMV staff briefed members of the DMV board during a legislative and public affairs committee meeting about new steps they are taking to tighten security

Their briefing detailed how much more work is needed to prevent bad actors from using the state's tag system to make fraudulent profits.

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Staff is developing plans to start inspecting small car dealers in person before they get a license to make sure they really exist and are not just obtaining a license to sell tags.

But the DMV said it currently does not have the staff to do that.

“In order to conduct premise inspections of all of these locations we would need investigators and vehicles positioned staged across the state and they would need additional support in Austin,” said Brian Ge, TxDMV Managing Attorney.

DMV staff said it would need at least more than a dozen new employees and almost $1 million a year just to inspect the number of new dealerships that opened last year.

"We would need investigators and vehicles positioned - staged across the state and would need additional support staff in Austin, Ge said.

Staff members also said they are continuing to develop plans to start fingerprinting dealers. The agency is looking at using private contractors to conduct the fingerprinting if the DMV board gives the green light.

As NBC 5 Investigates has previously reported the DMV does not fingerprint and fully vet people applying for car dealer licenses, the licenses which also give them access to the state's electronic tag system. The DMV has acknowledged dealer licenses have been obtained by people using stolen identities and then use that license to create and sell fraudulent tags.

The board that oversees the DMV began pushing to implement fingerprinting after NBC 5 Investigates shined a light on that security loophole.

Today the agency's director of the vehicle title and registration division, Roland Luna Sr., said he also wants software changes in the electronic tag system to prevent dealers from obtaining tags when entering false vehicle identification numbers. The DMV's system currently does not verify that the VIN entered matches the vehicle the tag is being issued to.

"We think it is important when the 17 character VIN is inserted into the system that it can be validated. The only way the VIN can be validated is if we use VIN decoding", Luna said.

Law enforcement officials who attended Wednesday's meeting said they were encouraged by what they heard. Some have complained the DMV has been slow to act.

"It's a start there's a long way to go but like I said we're now starting to see more cooperation out of them", said Travis County Constable Stacy Suits.