Making Inroads Against Threat of Odometer Fraud

When federal authorities obtained a guilty plea last year from Khosrow Kohanchi for rolling back the mileage on used cars, it looked like another case proving the serious and growing threat of odometer fraud.

Kohanchi was accused of importing cars to Los Angeles from Baltimore, rolling back the odometers and bilking consumers. He was sentenced to four months’ incarceration and ordered to pay restitution of $1.2 million, the largest amount for odometer fraud since it was defined as a federal crime in the mid-1970s.

But Kohanchi’s case and the 15 or so others like it brought every year by federal authorities may be something less than a reflection of a widening consumer menace.

A new federal study released last week shows that odometer fraud is probably not nearly as large a problem as the public has been led to believe during the last decade.

The Department of Transportation reported that 450,000 cases of odometer fraud occur in the U.S. each year, costing consumers more than $1 billion by putting a higher value on used vehicles than is warranted by their actual histories.

“Odometer fraud puts the safety and well-being of consumers at risk because it misleads them about the wear and tear on the vehicle they are buying,” Transportation Secretary Norman Y. Mineta said.

But that seems to represent something of a rollback in our perception of the crime. In the late 1980s, the federal government warned that 1 million to 3 million cases of odometer fraud were occurring each year, costing consumers $3.3 billion to $4.1 billion.

Various reports by state agencies also have warned of a fairly high threat.

In 1992, Pennsylvania found that 5% of the odometers on leased cars were rolled back before resale to consumers, based on a random sample of 49,229 vehicles. The study estimated that vehicle buyers spent an additional $6,653 on average, based on the false perception of lower mileage.

Illinois authorities sounded an even more dire warning in 1985, estimating that 49.8% of leased vehicles had their odometers rolled back.

Ever since the then-Chrysler Corp. admitted in the 1970s that it had disconnected odometers on new cars while they were used by executives, many consumers and experts have assumed that odometer readings are next to worthless when buying a used vehicle.

Federal officials say the lower figures in the recent report show they are making inroads against odometer fraud through enforcement.

A four-person odometer fraud swat team is run out of the National Highway Traffic Safety Administration under the supervision of Richard Morse, the odometer fraud chief at the agency since the mid-1970s.

“I would like to think our enforcement has had something to do with it,” Morse said, noting that the 1986 Truth in Mileage Act has created additional consumer protections. Under the law, odometer readings must be printed on a vehicle’s title each time it is transferred. Previously, the mileage was recorded on a separate disclosure form that was difficult for buyers to track down.

Vehicle technology is changing as well. Nearly every new car or truck these days is equipped with a digital odometer, though Morse insists that the new electronic dashboards are just as easily manipulated as the older mechanical and cable-operated systems. The new federal study makes no mention of digital odometers.

Morse notes that a lot of odometer spoofing equipment is available on the Internet, including popular auction sites. The systems typically use special software and connections that plug a laptop computer into a car’s electrical harness, Morse said.

Another important technology development is the use of secret chips by manufacturers to record mileage in places other than the odometer system.

Chrysler, now part of DaimlerChrysler, has been using such chips the longest, though Ford Motor Co. and General Motors Corp. also have introduced them.

Dealers can use them to prevent warranty fraud, though consumers as yet have no way to access the data.

Even if odometer fraud is less prevalent today, you can still get ripped off and it still makes sense to take precautions when buying a used vehicle. You should follow a few basic safeguards.

First, always ask to see service records, which usually record the odometer reading and date of service. That gives you a good idea of the mileage profile of the vehicle.

Consult one of the services on the Internet that can provide a vehicle ownership history.

If you don’t want to pay, go to the California Bureau of Automotive Repair’s Web site at www.smogcheck.ca.gov and use its database for examining the vehicle’s smog-check history.

Finally, have a mechanic examine the car or truck carefully to see whether its condition is appropriate for the miles recorded on the odometer.

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Ralph Vartabedian cannot answer mail personally but responds in this column to automotive questions of general interest. E-mail: ralph.vartabedian@latimes.com.