How used cars end up missing mileage.
By: David Van Sickle
• Van Sickle covers the auto industry for the American Automobile Association in Washington, D.C.First, you shopped for a new car, but the price was out of reach. Instead, you found a late-model sedan with about 30,000 miles on it. The car looked great, and the price was right. You drive less than 15,000 miles per year, so you figured this little cream puff would last a long time.
You got a good deal, right?
Maybe not, especially since the engine has started using oil and that steering problem you thought could be fixed with a simple wheel alignment has been diagnosed as a worn out rack-and-pinion unit. Worse yet, the dealer won't make the repairs under warranty, because a check showed the real mileage is over 75,000 miles.
How could this happen?
The chain of events leading up to a fraudulent car sale varies, but it usually goes something like this: The car is first owned by a leasing company that supplies fleet cars to other businesses. According to the National Highway Traffic Safety Administration, these vehicles are typically used by business people spend most of their time on the road. They average about 32,000 miles a year and are driven for two to three years. By the time the lease is up, they have accumulated over 75,000 miles. The leasing company sells the car at auction, along with several hundred others. This is a high-volume, fast-paced business, and the leasing company seldom sees a car after it is turned in. The cars are hauled away to the auction lot, where as many as 9,000 vehicles might be sold in a single day. The auction price of a car is remarkably well-established. Buying guides spell out how much a vehicle is worth, with adjustments for its condition and mileage. The difference in wholesale value between a midsize sedan with 30,000 miles and 75,000 miles averages about $63,600.
Buyers at auctions are usually dealers or wholesalers. The auction house transfers the title of the vehicle from the leasing company to the new owner. At that time, the actual (and usually honest) odometer reading is recorded on the original title. So far, so good. The new owner gets a new title by surrendering the old title and completing an application for a new one. The odometer reading shown on the old title should match the reading on the application for the new title. Usually, this is carefully checked by the clerk. However, several states, notably Virginia and New Jersey, don't uniformly check. This lack of oversight makes it possible to change the number on the old title and record a lower number on the application for a new title, making these states perfect places to launder a title. This scheme allows the new owner to have a new title showing fewer miles than the actual odometer reading.
The rest of the fraud is simple. The odometer is rolled back to the figure shown on the laundered title, the car is cleaned up to look like new, and an extra $3,600 in profit goes into the wholesaler's pocket when the car is sold to a retailer. The very nature of the used-car market makes it a fertile territory for fraud. Over 600 auction houses operate in the United States, and each has at least one major auction per week. Over 16 million cars are sold at auction every year; many go to auction several times during their useful life.
Unfortunately, individual consumers cannot count on getting help from the federal government. Federal law prohibits resetting an odometer or making a false statement. However, the federal government is prohibited from taking legal action for individual consumers, so victims must sue for civil damages. It's best to consult a lawyer about how to proceed. If the case is won, the court will award $1,500 or three times the amount of the damages, whichever is greater, plus court costs and reasonable attorney fees. However, you must be able to prove who was responsible for the misrepresentation - and that there was intent to defraud. But it is possible to get help from Ohio officials, who will investigate.
