Soaring Used-Car Sales Fuel Old Fraud: Odometer Scams
May 01, 2011
Odometer fraud is making a comeback. Rising demand for used cars is sparking a revival of a crime that is as old as the automobile itself. Law-enforcement officials across the U.S. say reported cases are at a 10-year high, as rings of scam artists buy up used cars and roll back odometers to make old vehicles appear newer than they actually are. Consumer complaints about odometer tampering have tripled in the past two years, to about 100 a month, according to Ricki Weeks, chief of the odometer fraud staff for the National Highway and Traffic Safety Administration. ``We're swamped, and everyone I talk to is swamped,'' Mr. Weeks says. Odometer fraud last flared up in the mid-1980s, moving government and industry to attempt a crackdown. In 1986, Congress passed the federal Truth in Mileage Act, making odometer tampering a federal felony with a three-year maximum jail sentence and requiring that automobile titles include mileage counts. Some manufacturers introduced digital odometers to help combat the problem. This time around, there are some new culprits: People trying to dodge steep penalties for exceeding mileage limits on leased cars. Auto makers impose the limits to make sure leased cars aren't driven to the ground. With penalties sometimes running in the thousands of dollars, ``it's just too much of a temptation for some,'' says Johnetta P. Swinney, a commander in the investigative section of the California Department of Motor Vehicles. Most perpetrators, however, operate in rings of a dozen or so professional mechanics, forgers and ``runners'' who buy and sell vehicles or handle paperwork. ``Right now, I'm working on five cases, but I could be working on 100,'' says Markita Naylor, a detective sergeant with the New Jersey State Police. The NHTSA's investigative team takes a case only if it involves a ring that has tampered with 150 vehicles or more. (Smaller rings that target individual buyers through the classified ads, are proliferating, however.) This crime pays well: Larger rings hitting 2,000 or more cars can rake in more than $6 million a year, according to NHTSA. Buyers may pay $3,000 to $4,000 too much for a car with spurious mileage -- and that's before repair costs. All told, the bill to consumers for rollbacks totals some $4 billion a year, according to NHTSA. Just how big is the rollback problem? Bigger, apparently, than in the early 1990s, when NHTSA estimated that odometers had been altered in 4% of used cars. Last month, a five-state survey of 3,600 vehicle histories by CNW Marketing Research in Bandon, Ore., showed that 8.5% of used cars were being ``clocked.'' Nationwide, about 6% of vehicles have questionable odometer readings, according to estimates by Carfax Inc., a Fairfax, Va., company that provides title and mileage information to dealers. Markita A. Winford of Richmond, Va., says ``just about everything,'' including his odometer, broke down on his 1990 Cadillac Sedan de Ville at about 47,000 miles. He would soon find out why: The actual mileage was 80,000. ``The fuel pump broke, the transmission, the air conditioner twice -- you name it,'' recalls Mr. Winford, who bought the car in 1992 for $22,000 when the odometer indicated 27,000 miles. ``I thought, `This doesn't usually happen until 80,000 miles.' '' A mechanic at the dealership that sold him the car did most of the repairs under warranty, but the work still cost Mr. Winford about $1,000. By this time, records of Mr. Winford's car had turned up in a federal bust of a large rollback operation. After he was notified by authorities, Mr. Winford traded the car in to the dealer he'd bought it from, who gave him a deep discount on a 1993 de Ville with only 23,000 miles. Mr. Winford says that before taking possession, he had an independent mechanic verify the mileage. The professional rollback artists most often hit vehicles two to four years old coming off leases or commercial fleets. Sport-utility vehicles and midsize cars are popular targets. Investigators say that after buying a high-mileage car legitimately on the wholesale market, the crooks roll the odometer back by 30,000 miles or more, then resell the car at an inflated price, usually to an unsuspecting dealer or auctioneer. Before the sale, they doctor the title to match the odometer. This is easiest in states where titles are handed out over-the-counter without careful checking. Many scammers use stencils, glue or nail-polish remover to change the numbers on a title; they may create phantom dealer names to elude authorities or pay runners to bring as many as 10 fraudulent titles at once to motor-vehicle departments. Often, however, they're sloppy, taking pains to paint a car's exterior to make it look newer while leaving the interior worn or the odometer marred. Or they sometimes rip out pages in a car's service manual to hide mileage records. (Most repairs done under warranty are kept on record by dealers, who record mileage. Some dealers also provide title history services, which chart mileage of cars that have been resold at least once.) While NHTSA pushes for more cooperation from dealers in ferreting out rolled-back cars, dealers and wholesale auto auctions argue that the government should do more to crack down on fraud. ``If the federal people complain about this, they need to take the problem seriously and take steps to avoid it,'' says Mikki Howard, president of ADT Automotive Inc., an auction company in Nashville, Tenn.. He adds: ``There's no point in having a law if you can't enforce it.''
