Odometer Fraud Costs Victims $1 Billion Annually

Consumers warned to get a vehicle history report before buying any used car

By Deanna Dewberry
|  Tuesday, Feb 25, 2014  |  Updated 11:04 PM CDT
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Odometer fraud victims lose almost $1 billion a year when they unknowingly pay more for a used car than it's worth.  Consumers are best protected by getting a vehicle history report before buying any used car.

odometer, fraud, Texas, cars, used car, dealerships, consumers, investigations, consumer

Odometer fraud victims lose almost $1 billion a year when they unknowingly pay more for a used car than it's worth. Consumers are best protected by getting a vehicle history report before buying any used car.

Consumers in the market for a used car need to do their due diligence to protect themselves from being victims of odometer fraud. Experts say that means buyers should get a vehicle history report to check for mileage discrepancies, among other issues, before spending any money on any used car.

“Your recourse or remedy on the front end is much better then on the back end,” said Clint Thomson, chief of title services for the Texas Department of Motor Vehicles, whose office investigates odometer fraud cases to turn over to local law enforcement agencies.

DFW is the fifth-largest used car market in the country, according to CWN Research, which compiles data for the automobile industry. DFW also ranks fifth when it comes to the percentage of suspected odometer fraud cases, according to Carfax, who suggests there are nearly 200,000 cases of intentional mileage rollbacks a year nationwide.

The National Traffic Highway Safety Administration said odometer fraud costs American consumers nearly $1 billion per year.

“With odometer rollbacks, the value of the vehicle is artificially inflated so people are losing money by not only paying more for the car than it’s worth, but also in the amount of service and repairs that are going to be needed sooner than expected because the car has 50,000, 100,000 miles more than the buyer expects,” said Chris Basso, spokesman for Carfax, which collects vehicle history information from 34,000 data sources.

“With the advent of the digital odometer, it actually can be easier to rollback a car’s mileage,” Basso said, “It’s as simple as plugging a tool into the car’s computer and typing in whatever mileage reading you want that dashboard to say.”

It’s also a safety concern. These cars with high miles and often multiple mechanical problems can put anyone on the road all at risk.

The Texas DMV website has a list of companies where consumers can get vehicle history reports for as little as a few dollars. All a consumer needs is the Vehicle Identification Number to perform the search. Carfax offers a free odometer check with a car’s VIN. For a fee, consumers can also get a detailed report from Carfax.

“It’s a concern to us from a consumer standpoint,” said Thompson. “We are reaching out currently to educate consumers and help them help themselves.”

“The Red Flags”

A vehicle history report may have helped Denton residents Kristin and Ferron Young avoid buying a car that had its odometer rolled back about 67,000 miles.

The couple, who are both college students with a young daughter and another child on the way, turned to Craigslist when they needed another car on a tight budget.

“We needed something that we felt like would be good for the family,” Kristin Young said.

They found an ad for a 2000 Honda Accord, which described the car as very clean with 101,000 miles. After seeing the car, they bought it for $3,200.

“We ended up choosing the one that we bought because it had lower mileage,” said Young.

The seller, salvage dealer Michael Eke, also had assurances. He said the car had been cared for and had only been in a little crash.

“He said that his wife was driving it,” Young said. “Something fell on top of the hood and all that needed to be fixed was the hood.”

But on the drive home, they said they noticed problems immediately. The clutch wasn’t working properly and there were other telltale signs indicating there may be other issues.

The next day, the Youngs bought a Carfax report, which revealed at the car’s last state inspection it had 160,000 miles.

Odometer fraud can be difficult to prove, especially in older vehicles. Carfax research shows 60 percent of rollbacks occur in vehicles between 11- and 19-years-old. But in Texas, once a vehicle hits the 10-year mark, mileage doesn’t have to be disclosed on title documents, making rollbacks, while still illegal, more difficult to trace.

That didn’t stop the Youngs from finding the truth about the car they bought. They became amateur detectives, pulling records that included a certified history of their car from the Texas Department of Motor Vehicles and subpoenaed records from the car’s last insurer.

Those records revealed the car had been totaled and sold to salvage. The insurer gave them a picture of the odometer at the time of the wreck. It read 167,000 miles.

Records show shortly after that, Eke bought the car, fixed it up and sold it to the Youngs.

“Why didn’t I see the red flags?” said Young. “I was pretty upset about it and just frustrated.”

The Youngs took Eke to small claims court and ultimately won. The judge ordered Eke to pay back the cost of the car, with interest and court costs.

“We just have no idea if we’ll ever see a dime,” she said.

That’s because even if a judge finds in a consumer’s favor, getting the loser to pay can be difficult.

NBC 5 Investigates Consumer Unit reached out to Eke to get his side of the story. But he hung up when we identified ourselves. Later, NBC 5 arranged a meeting with Eke after seeing another car he posted for sale on Craigslist. When NBC 5 arrived, Eke refused to answer our questions and quickly drove away.

The Department of Motor Vehicles is investigating the case.

“It was hard for us to make a bad decision like this. But maybe was to help others,” Young said. “I would just advise people to be really careful.”

She hopes she can help others see that odometer fraud us not merely changing numbers, it is changing lives as well.

“He doesn’t see how it affected us. He doesn’t see the safety aspect. He does see the financial aspect. He has no idea how much that set us back,” Young said.

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