Don't Get Scammed: Avoid Odometer Fraud

Odometer fraud is up 57 percent over the past four years, according to Carfax, the leading provider of vehicle history reports. And there's a good chance odometer fraud will leap again this year because, according to Carfax, nearly 3 million leased vehicles are expected to be turned in this year -- more than usual. Leased vehicles have a higher incidence of odometer fraud, presumably because many leases come with mileage limits and drivers may tamper with the odometers to avoid penalties.

While I'm throwing out stats to convince you to read on, bear in mind that Americans always buy more used cars than they do new ones, and that trend may also spike this year. After all, consumers are trying to save money in this tight economy and some are avoiding new American cars because they're worried about the future of the American car companies. So it's a perfect storm with a simple message: car buyer beware.

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By making a car appear to have lower mileage than it actually does, the seller can rake in thousands of extra dollars. The crooks call it "rolling back" or "spinning" an odometer.

Each year in America, bad guys tamper with the odometers on about half a million used cars. The typical rollback takes 30,000 miles off the life of a car. Since mileage is used as a gauge of how much wear and tear a used car has had, that translates into pure profit for the seller, pure misery for the buyer. AAA says the difference in value between a car with 40,000 miles and one with 70,000 miles is about $3,600. According to the National Highway Traffic Safety Administration, odometer fraud causes consumers to lose $4 billion a year.

So, how do crooks cover up odometer rollbacks? It's called "title washing." Crooks get the DMV to give them a new title for a vehicle and they lie about the mileage. Often they pose as mechanics or tow truck drivers, because some states allow these professionals to take possession of a vehicle if the owner fails to claim it. The state then issues a new title in the name of the mechanic or tow truck driver. The "washed" title can be used to cover up odometer fraud and other vehicle crimes.

These days, computer databases, like Carfax and others, are making it easier for consumers to catch odometer rollbacks. You should definitely invest in such a service before you buy any used car. But keep in mind, these databases are not foolproof. They're based on government records. They can tell you if an odometer reading is lower than it was the last time the car was titled. But some crooks have now started carefully rolling odometers back below their true mileage but above the mileage last recorded by the DMV.

Of course, there are situations where an odometer stops working or reaches its limit and starts over. In this situation, most states require a permanent notice on the title. That notice will either explain the situation in detail or state "not actual mileage" or words to that effect.

Know the signs:

12,000 miles a year is average for a car. If the mileage is much lower than that, the car could be a peach or a problem.

Original tires generally last up to 60,000 miles. So, if the car is supposed to have low mileage, but it has new tires, that could be a clue.

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