Senate votes to end Washington’s wholesale auto dealer license to avoid fraud

OLYMPIA – A special type of auto dealers license that state officials say can be used for illegal activity would be phased out by mid 2019 under a bill that passed the Legislature Thursday.

The Senate overwhelmingly approved and sent to Gov. Jay Inslee a bill that would keep the state from issuing new wholesale dealer licenses after July 1 and eliminate them entirely two years later.

The licenses are issued to people who buy and sell cars below the retail price or sell them to other licensed dealers. Wholesale dealers don’t have to operate a lot with regular business hours, have a building, or even a telephone listing.

The Legislature tightened up requirements for reporting by wholesale dealers last year after Department of Licensing raised concerns about the proliferation of out-of-state dealers registering in Washington after other states dropped that license category. In early 2016, the town of Wilbur had hundreds of wholesale dealers using offices in that town as an official address, even though none had a lot in the town and most had never been there.

State officials said they were trying to protect consumers against title washing, odometer fraud and misrepresentations, although a company that serviced the wholesale dealers said they were merely people who wanted a chance to bid on cars at auction and resell them.

Last year’s fixes didn’t work because some people found a way to work around them, Senate Transportation Committee Chairman Curtis King, R-Yakima, said Thursday. The only solution was to phase that license out.

Sen. Mike Padden, R-Spokane Valley, was one of only three senators to vote no. He said he agreed there were problems, but the state didn’t need to eliminate the license to fix them.