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Kansas privatizes more vehicle title work to firm set up by auto dealers lobby group

Kansas Vehicle Title Services Company, which was founded by a lobby group representing Kansas automobile dealers, is now performing a large volume of title processing business on contract with the Department of Revenue.

? A private company tied to a lobby group that represents automobile dealers recently took over another portion of vehicle title processing that used to be handled by the Kansas Department of Revenue.

Starting May 1, the agency said recently, Kansas Vehicle Title Services Company LLC took charge of processing same-day vehicle titles for the relatively small number of people who need titles immediately.

KVTSC is a company founded by Don McNeely, who is also president of the Kansas Automobile Dealers Association, a group that lobbies on behalf of dealerships.

The Kansas Automobile Dealers Association launched a private company in 2015 to take over some title processing business from the Kansas Department of Revenue.

Since 2015, KVTSC has been handling bulk title processing for automobile dealers, title and insurance companies and other entities that handle large volumes of vehicle business.

But the latest contract is the company’s first step in handling business for individual buyers, prompting concern about the company’s access to personal data collected by the Division of Vehicles when people title their vehicles.

“Sounds like a classic fox-guarding-the-henhouse scenario,” Carmen Balber, executive director of the California-based Consumer Watchdog, a nonprofit organization that focuses on consumer privacy. “Why outsource to the one company that is most likely to exploit drivers’ private data for their own gain? That’s like asking an alcoholic to tend bar. He’s not supposed to sample the wares, but what’s going to stop him? And who will ever know if he does? Bottom line, there must be more appropriate vendors if the state can’t conduct the service on its own.”

Department of Revenue officials say they published a public notice that they were seeking proposals for the work. Although KVTSC was the only firm that responded, they said the contract is not exclusive and any other firm can still submit proposals to do similar work.

In order to title a vehicle in Kansas, people must show an original title signed by the seller, a bill of sale indicating how much was paid, and proof of insurance — information which, collected over time, could be a valuable resource for marketing purposes by automobile dealers.

All of that information is stored in Division of Vehicles databases, and KVTSC’s contract with the state gives it the same level of access to that data that county treasurer’s offices have.

McNeely, however, said the contract also specifically prohibits the company from sharing that data with any third party, such as the dealers association or its members, or using it for any purpose other than to process transactions.

“This is small, small, small,” McNeely said of the same-day title contract during a phone interview. “Very few consumers need titles the same day because they can go to the county and get a title processed and get the title within two or three days. We’re talking less than 40 transactions a day.”

Department of Revenue spokeswoman Rachel Whitten said the agency audits KVTSC’s use of the information.

The contract was authorized through a 2013 state law that gives the Department of Revenue the authority to privatize additional aspects of the state’s vehicle registration and title system. It is unclear whether residents should expect additional parts of the vehicle registration system to be turned over to private companies at some point in the future. That potentially could cause much larger amounts of personal data related to vehicle purchases to end up in the hands of private companies.

Prior to handing over that business to KVTSC, same-day processing was handled out of a small Department of Revenue office in the Docking State Office Building, a building that the administration has been emptying out, although there still are no plans for what to do with the building in the future.

Department officials said no state employees lost their jobs as a result of the transfer. All of the employees who worked in that office either accepted jobs with KVTSC or were transferred elsewhere within the agency, Whitten said in an email.

McNeely said the idea of forming the company grew out of a task force Gov. Sam Brownback appointed in 2012 that was aimed at modernizing the Division of Vehicles. At that time, the division was plagued with computer problems that were causing long waits at vehicle registration offices throughout the state.

The following year, Kansas lawmakers passed a bill giving the Secretary of Revenue authority to privatize all or part of its vehicle registration and title operations. That law came in response to massive problems the agency encountered when it switched to a new computer system for processing those transactions.

That law also allows contractors to charge additional fees, on top of the state’s standard fee for vehicle titles, to cover their administrative costs.

“Customers can choose to pay a higher fee in order to walk out of the building with the title in their hand,” Whitten said.

McNeely said KVTSC does charge additional fees that vary by the type of transaction.

“The law was designed to allow private-sector innovation to serve Kansans who want a same-day title,” Whitten said.

She said the innovations that KVTSC provides are the same-day service, with shorter wait times.

KVTSC currently is small-scale. It operates one location in a shopping center at 37th Street and Burlingame Road in Topeka. McNeely said KVTSC has its own management that is separate from the dealers association, and that it is led by a longtime former employee of the Division of Vehicles.

“People have been very happy with the level of customer service we provide,” he said.