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Odometer Fraud Is Alive and Well in Digital Age

TIMES STAFF WRITER

Maybe you’d have qualms about buying a used car from Bill Clinton (or Kenneth Starr for that matter), but they aren’t in the same league with Clifford Suva II, an odometer-fraud felon awaiting his sentence in U.S. District Court in Los Angeles.

Suva pleaded guilty last year to 10 felony counts as part of a conspiracy with his two sons that included manipulating odometers to reduce the mileage by as much as 100,000 miles on a given vehicle. The Justice Department estimates that the conspiracy cost consumers $500,000.

The case demonstrates that the digital odometers prevalent in late-model vehicles have done little to thwart the pervasive crime of odometer fraud, despite automobile industry predictions that electronic dashboards would virtually eliminate the problem.

The federal government prosecuted 35 odometer-fraud cases last year, and the problem shows little sign of abating, says Dick Morse, longtime director of the odometer-fraud staff at the National Highway Traffic Safety Administration.

Consumers stung by odometer fraud overpay an average of $4,000 for high-mileage vehicles, the government says. A study in the late 1980s put overall losses at $3.3 billion to $4.1 billion, but that was based on the much lower estimate of $1,300 in fraudulent losses per car, Morse said. The study presumed that anywhere from 1 million to 3 million used vehicles are sold with tampered odometers, a significant portion of the 40 million used vehicles that trade hands in the U.S. each year.

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For many years, the scams were run out of small towns such as Cleveland, Tenn., where 27 people were sent to jail in the 1980s.

But the problem has spread since then. Digital odometers have proved more difficult to tamper with--but not impossible. The same hackers who clone cell phones are adept at knowing how to reprogram a vehicle’s memory chips, Morse says.

“Two or three years ago, we had a conference in South Carolina and [the industry] was talking about digital odometers,” Morse recalls. “Our question was: Can they be reset? They said yes, but it will be tough, and that even dealers won’t have the equipment to do it. Well, we saw how long that lasted.”

Suva’s scheme was to pull odometer “clusters” out of high-mileage vehicles and order replacement odometers, with much lower mileage, from dealers. Such swaps are permissible so long as they are meant to repair a broken odometer and reflect the true mileage of a vehicle. But nobody at the dealerships checked up on Suva.

Dealerships often do not have the technical capability to change odometers and must go to authorized speedometer and odometer shops that are supposed to carefully restrict access to low-mileage odometers and memory chips. That clearly did not happen in Suva’s case.

A more sophisticated scheme in the Western U.S. was prosecuted in federal court in Los Angeles in 1997. It involved several hundred vehicles whose odometers were electronically hacked, says Linda Marks, a Justice Department attorney who prosecutes consumer cases. Although nearly all new cars and trucks will have digital odometers within a few years, tampering is ever present.

“I don’t see it going away,” Marks says. “It has been pretty steady.”

In some vehicles, the mileage is recorded in more than one memory chip that can be accessed by experts. But used-car buyers have no way of verifying that the mileage shown on a digital dashboard is the same as that secretly recorded in a memory chip elsewhere in the car.

Under federal rules, dealerships must certify the authenticity of odometer readings on any vehicle up to 10 years old.

But that rule has represented a huge loophole that puts consumers at risk, says Bernard Brown, a Kansas City attorney who is a recognized expert on title and odometer fraud. Brown says that with Americans keeping their cars and trucks longer and longer, it is increasingly common for vehicles 10 years or older to have discrepant odometers.

Indeed, before 1988, federal regulations required dealers to certify odometer mileage for vehicles up to 25 years old. But the 25-year rule became a 10-year rule, ironically as a result of the 1986 Truth in Mileage Act.

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That law made odometer tampering a felony, but there were objections to the 25-year rule during the federal rule-making process that implemented the law. At the time, consumer advocates did not formally comment, so federal regulators during the Reagan administration decided to require odometer certifications only for 10 years on vehicles.

“We are not going to change our rule until somebody petitions us to do it, and nobody has petitioned us,” Morse of NHTSA says.

But he hardly disagrees that odometer fraud is something occurring on older cars. In some cases, the mileage is rolled back all the way from 250,000 miles, he says.

Buyers should be wary of any mileage shown on an odometer. The best defense is to have service records that show the odometer readings and dates of service over a long period of time. That should verify an orderly and progressive accumulation of mileage.

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Ralph Vartabedian cannot answer mail personally but responds in this column to automotive questions of general interest. Please do not telephone. Write to Your Wheels, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. E-mail: ralph.vartabedian@latimes.com.


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