Odometer Fraud: The Silent Scam Costing Americans Billions
A hidden crime is costing American consumers over $1 billion annually, and most don’t even know they’ve been victimized. It’s called odometer fraud, and it’s a growing problem with serious consequences.
While the average car buyer might be focused on getting the best deal on a used vehicle, fraudulent odometer rollbacks can turn a seemingly great bargain into a costly nightmare. Fraudsters manipulate odometers, making cars appear to have fewer miles than they actually do, inflating their value and leading to unsuspecting buyers paying thousands more than the vehicle is worth.
"We would like to see justice for the individual that pays $45,000 for a car that’s only worth $15,000," says Kevin Porter, an investigator who specializes in odometer fraud. "The average loss to a customer is about $4,000."
The problem is exacerbated by the soaring prices of used cars. Supply chain disruptions and a shortage of new vehicles have pushed more people to the used car market, driving up prices and making used vehicles more scarce – a perfect storm for scammers.
“It’s a bit of a stealth crime, one that can be very hard to detect,” says Porter, explaining that many victims don’t realize they’ve been scammed until it’s too late. "Often that first interaction is explaining to somebody this vehicle that you just paid $14,000 for, it could have been bought at auction a week earlier for $1,000."
Odometer fraud is also a complex crime, often tied to other illegal activities. "A single case of odometer fraud can and usually does involve several other crimes," says Porter. "For example, if you falsify the mileage on the title to the car, you have also committed title fraud. It can also lead to bank fraud, aggravated identity theft, and even wire fraud."
Lieutenant Jason Shrader, a North Carolina Department of Motor Vehicles inspector, is on the front lines of combating odometer fraud. He and his team investigate dealerships, used car lots, and any other location where they suspect odometer tampering. "A lot of complaints come from this area of Charlotte right here," says Shrader. "A pretty big hotbed for people curbstoning cars or selling vehicles, dismantling cars, towing cars, storing cars, anything you can think of with cars.”
While odometer technology has advanced, so have the tools used by fraudsters. It’s no longer about manually turning back numbers on a dial. "People think everything’s digital, so everything should be pristine," says Porter. "But the reality is that for a few hundred bucks, con artists can buy devices that will let them roll back thousands of miles instantly."
Although buying an odometer correction tool itself is not illegal, their use for fraudulent purposes is a growing concern. "The more recent fraud we’re seeing involves mileage blockers," warns Porter. "These are devices you can download an app for your smartphone and turn your odometer on and off with the click of a button."
The consequences of odometer fraud go beyond the financial loss for buyers. Higher maintenance costs, increased insurance premiums, and even issues with warranties are potential ramifications. The potential for hidden damage on a vehicle whose mileage has been rolled back adds another layer of risk.
Ultimately, odometer fraud is a serious crime that impacts people across all demographics. Porter’s warning is simple: "If it’s too good to be true, it probably is. And if it doesn’t feel good in your gut, then don’t do it." Protecting yourself from this silent scam means being vigilant and doing thorough research before making a purchase.
Odometer Fraud: A Stealthy Crime Costing Americans Billions
You might never have heard of it, but odometer fraud is a type of crime that affects nearly half a million vehicles and costs American consumers more than $1 billion every year. Fraudsters looking to boost profits on the sale of a vehicle roll back the numbers on an odometer, duping buyers into thinking the car has fewer miles on it than it does. American buyers lose an average of $4,000 a year to fraudsters, and most don’t even know they have been hit. This article will delve into the world of odometer fraud, exploring its impact, the tactics used by fraudsters, and the efforts of law enforcement to combat this growing problem.
Key Takeaways:
- Odometer fraud is a stealthy crime that costs American consumers over $1 billion annually.
- Fraudsters target used cars, manipulating odometers to inflate their value and deceive buyers.
- Victims often unknowingly purchase vehicles with rolled-back odometers, losing thousands in the process.
- Technological advancements have made it easier for fraudsters to manipulate odometers, with devices available online that can be used to falsify mileage.
- Law enforcement is working to combat this crime, but its widespread nature and the increasing sophistication of fraudsters make it a difficult challenge to overcome.
A Hidden Crime with Devastating Consequences
The average used vehicle price rocketed from about $20,000 in December 2019 to about $27,000 in December 2022. Supply chain disruptions and shortages in new vehicle inventory have pushed more customers to the used market, increasing the demand and driving up prices. This dynamic has also made used vehicles more scarce, creating a fertile ground for fraudsters.
"I can’t tell you for sure, but I suspect with the recent surge in used car prices that it’s become a more enticing tactic for scammers," says Kevin Porter, whose job it is to investigate odometer fraud.
Odometer fraud is a sophisticated crime that often involves a complex web of other illicit activities. "A single case of odometer fraud can and usually does involve several other crimes, which carry their own penalties," says Porter. A single fraudulent odometer reading can trigger a chain reaction of related crimes, further damaging the victim and increasing the severity of the offense.
"For example, every car comes with a title. That title typically has the mileage on the car at the time of sale. If you falsify the mileage on the title to the car, which you pretty much have to do if you change the odometer, you have also committed title fraud," explains Porter.
Beyond title fraud, odometer fraud can also lead to bank fraud. If a loan is secured based on the falsified mileage, lenders could be unknowingly extending financing on a vehicle that is worth significantly less than they believe. Additionally, fraudsters may leverage aggravated identity theft by buying a car and selling it without putting their own name on the title, effectively pretending to be the previous owner. Wire fraud and mail fraud can also be involved in cases that involve online sales, social media interactions, and the physical mailing of documents related to the vehicle.
An Inside Look at How Odometer Fraud Works
"A lot of our victims, they don’t know they’re victims until we reach out to them. Often that first interaction is explaining to somebody, ‘This vehicle that you just paid $14,000 for, it could have been bought at auction a week earlier for $1,000’," says Porter. The sheer scale of the losses and the fact that most victims are unaware of the crime makes odometer fraud a particularly devastating offense for consumers.
Lieutenant Jason Shrader, an inspector with the North Carolina Department of Motor Vehicles, dedicates his time to investigating odometer fraud. "A lot of complaints come from this area of Charlotte right here. A pretty big hotbed for people curbstoning cars or selling vehicles, dismantling cars, towing cars, storing cars, anything you can think of with cars," says Shrader, highlighting the hub of odometer fraud activity in his state.
Shrader and his colleagues search vehicles for evidence of odometer tampering. While the number of victims in any given case can vary, some cases involve thousands of vehicles.
"Sometimes a customer with a lease will roll back an odometer before turning the car back in in order to keep the car under the mileage specified by the lease term," explains Shrader. Other instances involve dealerships rolling back odometers on used cars, or individuals buying high-mileage vehicles and staging accidents to defraud insurance companies.
"We’ve had cases where individuals buy a higher mileage vehicle, maybe a 300,000 mile SUV. They roll the odometers back to 30,000 miles and then they’ll stage that vehicle out in an accident. And then insurance is paying out at the lower mileage value for the vehicle," says Shrader.
The Evolution of Odometer Fraud: From Analog to Digital
Estimates suggest that about 10.5 million cars on U.S. roads have had their odometers tampered with in some way. About 20% of those have had their odometers rolled back, a 7% increase over the previous year. The evolving nature of odometer fraud reflects the rapid advancements in automotive technology.
"When most odometers were analog counters on the dashboard, rolling back an odometer was a matter of manually turning back the numbered dials. 20 years ago, we could turn the numbers back by hand." says Porter. The methods used to manipulate odometers have shifted from analog to digital, becoming increasingly sophisticated and easier for criminals to execute.
"People think everything’s digital, so everything should be pristine," says Porter. However, the reality is that readily available technology allows criminals to easily change miles on digital dashboards. "But the reality is that for a few hundred bucks, con artists can buy devices that will let them roll back thousands of miles instantly."
"As you can see, I’m on Google, vehicle or odometer tools. You have all these different mileage correction, odometer adjustment diagnostics tool, professional automotive scanner, Odometer adjustment tool, $28.99. Odometer Mileage Correction, OBD Diagnostic tool, $399 on eBay. So you can see that they range from different manufacturers, different makes and different pricing depending on how much and how in-depth of the technology that you want to get," says Porter, highlighting the ease with which fraudsters can purchase devices capable of tampering with digital odometers.
These devices can be plugged into a car’s computing port, allowing fraudsters to easily manipulate the mileage. Some require more intricate procedures that involve physical intervention with the dashboard, but even these are not insurmountable obstacles for skilled criminals.
"There’s different levels of skill that it’s going to take, but we’ve not come across a vehicle that can’t have its odometer rolled back." says Porter, emphasizing the alarming reality that technology has not effectively stopped this criminal activity.
"To be clear, buying an odometer correction tool is not illegal," says Porter. These tools can be used for legitimate purposes, such as repairing a damaged odometer. However, the more recent emergence of illegal mileage blockers has raised even greater concerns.
"The more recent fraud we’re seeing involves mileage blockers. These are devices that ship from overseas that you can download an app for your smartphone and turn your odometer on and off with the click of a button," says Porter. These devices prevent the odometer from accurately registering the true mileage, allowing criminals to operate vehicles for thousands of miles while the odometer indicates minimal mileage, further deceiving buyers and making accurate vehicle history reporting nearly impossible.
"If you drive your car for 1000 miles, your odometer is only going to register 100 miles. Obviously, those devices are illegal and should not be used, but we see those in growing numbers showing up here in the United States," says Porter, highlighting the growing threat posed by these technologically advanced fraudulent devices.
The Impact on Consumers and the Difficulty of Detection
The financial and emotional cost of odometer fraud can be significant for victims.
"My dad was actually a victim of odometer fraud," says Porter. "He bought a car out of South Carolina and the odometer had been rolled back 65,000 miles. And he didn’t contact me. He didn’t do his research and he didn’t know who the guy was or where he bought it from. It was a very good deal on a vehicle and he fell for it. So if it’s too good to be true, it probably is. And if it doesn’t feel good in your gut, then don’t do it.”
Experts agree that odometer fraud is a crime that is often undetected due to its stealthy nature. "There’s a tremendous amount of this fraud that’s occurring all across the country," says Porter.
"There’s several very prominent cases that I’ve worked over the past few years where we had hundreds of vehicles involved, but the rollbacks on all those vehicles did not show up on any vehicle history report you could buy. Fraudsters seek out cars with gaps in their vehicle reporting history, which often includes vehicles serviced at home or vehicles serviced at shops that for whatever reason aren’t logging and reporting mileage on the car," says Porter.
The lack of reliable and consistent mileage reporting can make it difficult to discern tampered odometers from genuine readings. "They would research the vehicle history. If there was a recent reporting, say, within the past 12 months that blocked them from rolling back the mileage, they wouldn’t buy it. They would go onto the next one that had the latest reporting was maybe three years ago," says Porter, highlighting the strategic and calculated methods used by fraudsters to identify vehicles with weak points in their history. The challenge of detecting odometer fraud has increased with the digitization of odometers. "Cars older than 20 years are not required to have their mileage stated on the title. This also makes them attractive targets for fraudsters," says Shrader.
Although difficult, efforts are underway to combat this growing problem. "Discovery often happens because one customer will notice something wrong with the car and report it to a local consumer protection bureau. From there, a case gets built. Just enough information to start digging into that dealership, those individuals," explains Porter.
"There’s a tremendous amount of this fraud that’s occurring all across the country," says Porter, emphasizing the national reach and impact of this crime. Detecting fraud often requires a collaborative effort between consumers, law enforcement, and vehicle history reporting services.
Preventing Odometer Fraud: A Multi-pronged Approach
Combating odometer fraud requires a multi-pronged approach that involves both preventative measures and law enforcement strategies.
Consumers can play a vital role in protecting themselves from this deception. Carefully examining vehicle history reports, performing independent inspections, and being cautious of unusually low prices are all important steps in mitigating the risk of falling victim to odometer fraud.
"If it’s too good to be true, it probably is," says Porter, reminding consumers to be skeptical and exercise caution when purchasing used cars.
Law enforcement is working tirelessly to investigate and prosecute odometer fraud. However, the increasing sophistication of the crime makes it challenging to stay ahead of fraudsters. Investing in law enforcement training, bolstering investigative resources, and pursuing stricter penalties for odometer fraud are all essential to deterring this criminal activity.
"There’s other ways we get to those individuals that are doing it, those fraudsters," says Porter, highlighting the ongoing efforts to identify and hold accountable those perpetrating odometer fraud. While odometer fraud is a stealthy and difficult crime to uncover, awareness, vigilance, and collaborative action are crucial to protecting consumers and holding fraudsters accountable for their actions.
