TxDMV to address illegal paper tags, law enforcement says tougher background checks needed

AUSTIN (KXAN) — Deputy Constable Connor Emens is on the hunt.

“I’ll make between 15-20 traffic stops” a day for fraudulent paper license plates, Emens says, before being interrupted.

“Go ahead and run it for me,” Sgt. Jose Escribano tells him over the radio.

Emens and Escribano, driving in separate cars, are scanning Austin’s streets searching for illegal temporary tags.

“Kasniels [Auto],” Emens replies, after running a Texas paper license plate into his laptop. That dealer name triggers their lights and sirens. The driver of a white 2004 Chevrolet pickup truck is pulled over and admits he paid $100 for the illegal tag.

“Because he could not get that vehicle registered,” Escribano said.

Using fake photos and stolen IDs, criminals are tricking the Texas Department of Motor Vehicles into giving them car dealership licenses. Only, a KXAN investigation found, they are not selling cars. Instead, they are selling real temporary license plates, which are being used across the country to allow dangerous cars on our roads or cover up crimes.

Law enforcement, including the Federal Bureau of Investigation, say Texas isn’t doing enough to put the brakes on the paper plate problem, which has ballooned into a $200 million black market criminal enterprise. Criminals are infiltrating the TxDMV by posing as car dealers, a KXAN investigation found. With a dealer’s license, they can easily print real buyer’s tags – complete with fake names, addresses and VINs – and selling them to all 50 states, said Escribano.

“Even Hawaii,” said FBI Special Agent Brannon Coker with the Houston Division. “Texas is leading the way in the volume of paper tags that are being fraudulently issued across the country.”

Law enforcement says these “ghost cars” are tied to crimes big and small. From avoiding tolls, insurance and car inspections to robbery and murder, fugitives are able to hide in plain sight. As part of the traffic enforcement unit, Emens sees these tags every day.

For two years, the Travis County Constable’s office has complained about fake VINs and shell company dealers. This month, TxDMV Executive Director Whitney Brewster blamed a “defect” in its online database when asked why fake VINs are able to be entered.

Brewster also blames red tape for the ongoing problems.

“Where is the oversight?,” asked KXAN investigative reporter Matt Grant. “How is this allowed to continue to happen?”

“HB 3927,” said Brewster. “Prior to that, we did not have the authority to be able to shut off bad actors quickly. We now have that authority.”

The new state law – HB 3927 – went into effect in September. It allows the TxDMV to cut off access to its password-protected dealer portal for suspected fraudsters. The board will meet in Austin on Jan. 27 to finalize the new rules, which include capping the number of temporary tags a car dealer can issue in a year.

However, some in law enforcement say the new law doesn’t go far enough. They want dealer applicants fingerprinted and non-franchised car lots physically inspected to ensure they don’t exist solely on paper.

A TxDMV advisory committee recently recommended fingerprinting new applicants, physically inspecting new non-franchise dealer locations and capping paper tags to 900 in a calendar year.

Those recommendations will be discussed at the next board meeting. If approved, the measures will “require further vetting” in order to “better understand their potential impacts and resources needed prior to implementation,” a TxDMV spokesperson says.

“The Texas Department of Motor Vehicles (TxDMV) appreciates the work of the Motor Vehicle Industry Regulation Advisory Committee (MVIRAC) and their recent deliberations regarding potential regulatory improvements to prevent bad actors from entering the motor vehicle industry and further curtail inappropriate distribution of temporary vehicle registration tags,” a TxDMV spokesperson said in a statement. “This is an example of the department’s commitment to engaging stakeholders in helping design and implement the detailed operations envisioned by House Bill 3927. The MVIRAC recommendations will be presented to the TxDMV Board for consideration during an upcoming public meeting on January 27, 2022. If approved, these recommendations will require further vetting and development by TxDMV to better understand their potential impacts and resource needs prior to implementation.”