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Automobile Fraud: 5.6.7.2 Signature Requirements

Every time a vehicle is transferred, both the transferor and transferee must sign the assignment, whether it is on the title, a reassignment form, a power of attorney, or an electronic disclosure. When there are multiple sellers or multiple buyers, NHTSA has stated that any one buyer and any one seller may sign the disclosure statement on behalf of all the buyers or sellers.304

Automobile Fraud: 5.6.7.3 NHTSA Authority to Require Non-Mileage Disclosures

NHTSA’s authority to require non-mileage disclosures is based on the congressional mandate to NHTSA to specify the “way in which information is disclosed,”311 which includes the authority to require additional, related disclosures to assist in the disclosure of the mileage information.312 A purpose of the Act, and the stated purposes of the disclosure regulations, is to help the buyer use an odometer reading to evaluate a vehicle’s condition and value as well as to prevent odometer tampering.

Automobile Fraud: 5.6.8 Acceptance of Incomplete Disclosures

The Federal Act prohibits anyone acquiring a motor vehicle for resale from accepting a disclosure unless it is complete.315 If a dealer provides an incomplete disclosure to a consumer, the consumer has not violated the Act. But if a wholesaler or a consumer selling a trade-in provides a dealer with an incomplete disclosure, the dealer has violated the Act even though it is the wholesaler or consumer that failed to provide the complete disclosures.

Automobile Fraud: 5.6.9 Record Retention Requirements for Dealers, Distributors, Auction Companies, and Lessors

NHTSA regulations create odometer record retention requirements that apply only to certain transferors and transferees: “dealers and distributors of motor vehicles,” “lessors,” and “auction companies.”316 A dealer is defined as a person that sold at least five motor vehicles during the prior twelve months to buyers that in good faith bought the vehicles other than for resale.317 A distributor is a person that sold at least five motor vehicles during the prior twelve months for resale.

Automobile Fraud: 5.7 Conspiracy

The Act provides that a conspiracy to violate any of the Act’s substantive prohibitions and requirements327 also violates the Act.328 A conspiracy to roll back an odometer or even just to violate the Act’s disclosure requirements is actionable under the Act.

Automobile Fraud: 5.8.3 General Standards Concerning Proof of Intent

As intent to defraud is a necessary element of a private right of action under the Federal Act, the plaintiff must both allege such intent and present evidence of it.353 The plaintiff must allege intent to defraud with enough particularity to satisfy Federal Rule of Civil Procedure 9(b).354 But the plaintiff need only prove intent to defraud by a preponderance of the evidence, and not by clear and convincing evidence.355 The trier of fact will make

Automobile Fraud: 5.8.4 Inferring Intent from Proof of Odometer Tampering

Proof of odometer tampering raises a rebuttable presumption that the tampering was done with an intent to defraud.363 There are few legitimate reasons to tamper with an odometer, and the tamperer must carry the burden to prove that such a reason existed.364 As one court noted in a non-odometer case, “the odometer is designed to give accurate information about how far an automobile has traveled, and no reason for turning it back other than to deceive potential buyers can be imagined.”

Automobile Fraud: 5.8.6 Inferring Intent from Failure to Disclose or from Dealer’s Circumvention of Disclosure Requirement

The weight of authority indicates that intent to defraud can be inferred when a dealer violates the Act by failing to provide a mileage disclosure statement.375 The mere failure to give a disclosure cannot be presumed to be inadvertent.376 The dealer is presumed to know of the disclosure requirement, even if a consumer may not be presumed to know the Act’s requirements.377

Automobile Fraud: 5.8.8 Inferring Intent from Dealer’s Failure to Investigate

An intent to defraud can be inferred even when the odometer disclosure provided to the dealer indicates that the mileage is accurate. Dealers have a duty to inspect and make an independent determination when they have reason to suspect a previous disclosure is inaccurate.386

Congress explicitly rejected including language in the Act which would have permitted reliance on the disclosure of the previous owner.387 The Senate Report states:

Automobile Fraud: 5.8.9 Inferring Intent from a Carfax Report

Carfax or other vehicle history reports are often reviewed by car dealers, and representations about the report are often made to consumers. These situations may present an opportunity to prove dealer intent. For example, a federal court found that there was a fact question as to intent when the Carfax report revealed an odometer discrepancy and the dealer showed the report to the consumer, but rushed the consumer to prevent the consumer from reading the report.401

Automobile Fraud: 5.8.10 Does a Repossessing Creditor’s Lack of Investigation Show Intent?

Many used cars are introduced into commerce by creditors or lessors who repossess the vehicles and then resell them, often at dealer-only automobile auctions. These creditors may disclose the odometer reading as accurate even though they have no direct knowledge of whether that is in fact the case. The creditor has an obvious financial incentive to disclose the odometer reading as accurate, but does this failure to investigate show an intent to defraud when the mileage is in fact inaccurate?

Automobile Fraud: 5.8.11 When There Is a Pattern of “Clerical Errors”

Dealers may claim that an inaccurate odometer disclosure is a mere clerical error. For example, the dealer may provide the consumer with a separate odometer statement, and check “mileage unknown” on its copy after the consumer signs that they received the statement. Then the dealer will claim that the failure to check “mileage unknown” on the actual title was a mere clerical error.

Automobile Fraud: 5.8.14 Examples of Dealers Overcoming Presumption of Intent

Not every dealer violation of the Act is made with intent to defraud; dealers can overcome this presumption with the correct facts. Misstating the mileage by only three miles has been found immaterial and not to show an intent to defraud.415 In another case, no intent was found when the dealer explained the odometer discrepancy to its buyer.

Automobile Fraud: 5.9 Consumer’s Waiver of Rights Under the Act

Dealers may attempt to insert in the sales agreement language stating that the car is sold “as is” or more specifically that, notwithstanding odometer disclosures to the contrary, the dealer makes no representations as to the vehicle’s mileage. Such disclaimers have no effect on the dealer’s liability under the Act for mistaken disclosures or other violations.430

Automobile Fraud: 10.1 Introduction

This chapter provides general advice on litigating an automobile fraud claim. For a federal or state odometer act case, use this chapter in conjunction with Chapters 5 and 6, supra, which examine litigation issues unique to those statutes.

Automobile Fraud: 10.2.1 Need for Expert Inspection

Any consumer with a fraud case involving the condition of the vehicle should be advised to have the car thoroughly inspected by a qualified mechanic at the earliest opportunity.2 If the consumer rescinds the sale and returns the car to the dealer, the consumer will need to have documentation of the car’s problems before turning over possession. If the consumer decides to keep the car and sue the dealer for damages, it is essential to have documentation of the car’s condition at the earliest possible moment, before it is driven any farther.