SOUTH BEND, Indiana — The Indiana Bureau of Motor Vehicles on Tuesday admitted it had overcharged state residents for the second time in a little over a year and said about 180,000 customers would share in $29 million in refunds.
The errors date from 2004 and are the result of vehicles being improperly classified when they were registered, BMV officials said.
Tuesday's announcement follows the settlement last year of a class-action lawsuit accusing the BMV of overcharging customers by $30 million. More than 4.5 million Indiana drivers were refunded $3.50 to $15 as part of the settlement.
BMV Commissioner Don Snemis said Tuesday that Gov. Mike Pence has authorized hiring an independent consulting firm to audit the agency.
"I don't want to discover any more errors after the damage has been done," Snemis told The Associated Press in a telephone interview. "We want to have an independent consulting firm come in and be proactive about it and avoid these problems in the future."
The latest overcharge stems from how the BMV determines the excise tax on vehicles. Under Indiana law, vehicles are placed in a tax classification based on value determined by the price of the vehicle and adjusted for Consumer Price Index data related to increases in new automobile prices. In some circumstances, the BMV's computer system did not apply the adjustment factor, which caused some vehicles to be misclassified.
The error was discovered while the BMV was manually entering the CPI data, Snemis said.
"When we started asking questions and looking into how the computer handled that whole system, we discovered that in some instances instead of using previous data it was using a zero adjustment factor instead, and that change was enough to cause some vehicles to be misclassified," he said.
While the average error comes out to about $161, Snemis said the BMV hadn't yet determined the range of payments that customers might receive.
"We suspect that some people who owned multiple vehicles, or, for instance, companies that owned fleets of vehicles or purchased fleets of vehicles at one time, might get quite a bit and some people might only get a few dollars because that was the effect on them," he said.
He said the agency will work with the Indiana Department of Revenue to issue the refunds. He says people affected should receive a letter within a month.
The settlement last year was based on a lawsuit brought by the Indianapolis-based law firm of Cohen and Malad. That law firm is suing the BMV again, alleging it overcharged for vehicle registrations and other services.
Irwin Levin, the attorney leading the lawsuits against the BMV, blamed a work culture at the embattled agency that doesn't respect residents' money.
"You can be sure that if the class action lawsuits hadn't uncovered the BMV's cavalier attitude toward the people's money, the BMV would have continued overcharging the very people they serve," Levin said Tuesday.
Snemis said people need to understand Levin's comments "are coming from a trial lawyer who is seeking a very big fee."
Indiana residents should have confidence in the agency because of how it has handled its errors, Snemis said.
"We're not shrinking from them. We're taking responsibility for them. We're bringing them to light. We're going to make sure people are made whole through this program, and in the future we're going to do the same thing," he said.
Snemis said he hopes to begin interviewing people to do the BMV audit within two weeks.
Associated Press writer Tom LoBianco contributed from Indianapolis.
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