Ombudsman George Brouwer found the road authority's data contributed to the Sheriff's office failing to recoup more than $100 million in unenforced warrants each year.
"Out-of-date address data is a major factor leading to the inability of Sheriff's officers to enforce warrants," Mr Brouwer said in the report.
VicRoads' address data is provided to the Sheriff's office and tolling companies when tolling fines and warrants are issued.
Mr Brouwer found VicRoads charged the Sheriff's office 16c for every address check it conducted.
If an address check had been completed for all 1.5 million warrants issued in 2012, VicRoads would have earned $242,000 for checking addresses.
Opposition roads spokesman Luke Donnellan said VicRoads had to overhaul the system "so that people aren't unfairly and inappropriately fined".
"I would be horrified if VicRoads didn't act upon this immediately; too many people are suffering because of it," Mr Donnellan said.
Frankston pensioner Christine Stewart has been battling the Sheriff's department for months after a warrant was issued for her car for unpaid tolling fines.
Ms Stewart learnt a change of address notification she sent to VicRoads in 2010 had not been registered for both her postal and residential addresses.
It meant her registration went to her new address while two tolling fines went to her old address.
VicRoads spokesman Travers Purton said drivers were legally responsible for advising VicRoads of a change of address.
"VicRoads is putting in place measures to confirm and correct addresses after advice is received from the Department of Justice that a person has been located at an address other than the one recorded by VicRoads, including writing to the customer at the recorded address and the address identified by the Department of Justice."
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