They’re the latest weapon in the federal government’s battle against online car salesmen — a “safety box,” for the uninitiated, that is placed inside the car in the event a car seller tries to sell the seller’s car with false information about its mechanical safety.
Since the boxes were first ordered made by the Obama administration, they have been getting more attention as the era of car sales from a small group of shady online auctioneers known as “transaction brokers” begins to wane. The drivers of these car sales feel the financial burden of legal battles that trace back to 2012, when Congress first pushed for the boxes. The Bureau of Industry and Security is required to collect and distribute the inspection certificates, known in legal lingo as a “spare parts kit,” within three years.
And the penalty for noncompliance is stiff: the police can shut down the individual seller’s business entirely, either with regulatory fines or with a search warrant. The dealer also can be hit with criminal charges, including mail and wire fraud.
At least 10 companies have already lost their businesses for violating the federal safety laws: for now. But efforts to shut down individual sellers are making their way to the federal courts.
Car Number One of Baton Rouge, Louisiana, was shut down in 2015 after a dispute with the state over whether it had properly certified sellers. The company settled the matter, paying $75,000 to the state, and relaunched last year. It now sells 5,000 cars a year.
State and federal authorities say that in October 2015, the company made 1,380 car inspections, with 6,178 cars still awaiting clearance as of April 2018.
A federal judge dismissed the case against Car Number One after the company won an appeal from a judge who said Car Number One had not known of the regulations before starting. The appeal was also dismissed.
Car Number One lawyers say their client was targeted unfairly by the state and federal governments. A spokesman said the company’s inspections were carried out properly, and the company, an importer, did not see that as a violation of safety requirements.
Another company, MS MT, claims it is being targeted by fraudsters. The Bay Area-based company has stopped selling cars online for roughly a year, after being raided by undercover prosecutors looking to stifle its business. MS MT’s website said it had not done anything wrong, and that the accusations were part of a larger fight against “Transportation for Hire” operations (transportation as in “pickup trucks, vans, and other commercial vehicles for the use of employees of unrelated individuals to transport parcels, freight, and items for hire”).
The company also suggests that it was raided as a means to confiscate cars that customers might be buying as parts to resell elsewhere: “There are significant regulatory violations associated with these individuals,” one MS MT sales executive said in a statement. “What is done in the dark of night must be closely monitored and monitored by the police.”
The FBI and state authorities would not confirm whether MS MT or Car Number One is the targets of investigations into vehicle safety inspections. But an FBI spokeswoman did confirm to The Daily Beast that Car Number One had been searched.
The defendant in the Car Number One case was Loma Broderson, one of a team of employees at the car inspection company. His attorney, Mario Mune, told The Daily Beast that his client felt attacked and harassed by the FBI. “His case is a shining example of the persecution of Bay Area technology entrepreneurs and Bay Area companies,” Mune said.
Other websites, such as “Car Buyer’s Guide,” and “Car Rentals and Leasing: How to Buy Your Next Car,” are now offering safety inspection certificates, seemingly making them stronger targets.
But the paperwork from the inspections remains secret, and it is unclear how many online car sellers are properly pulling these inspections off.