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Automobile Fraud: 2.2.5 Cursory Physical Inspection of the Car

It is often quite easy to spot a fraud just by examining the car. Although an expert’s testimony may eventually be necessary, this first visual inspection does not require an expert. It can be performed by someone in the attorney’s office, by the consumer, or by almost anyone else. This initial physical inspection involves checking features of the car that most retail buyers lack the knowledge to evaluate but that are readily apparent once a person knows what to look for.

Automobile Fraud: 2.2.6 A Haywire Odometer

Almost all odometers are now digital. Tampering with such odometers requires different techniques than altering a mechanical odometer. Less sophisticated personnel may try to alter the readout of a digital odometer without fully altering the computer chip itself. In that situation, the computer chip will eventually override the readout and strange readouts will result.

Automobile Fraud: 2.2.7 Checking the Odometer History with a Franchised Dealer

There are at least two ways that a franchised dealer can help a consumer check a car’s odometer history. If the odometer reading indicates a car is still under warranty, the consumer can usually find out the odometer’s accuracy simply by taking the car for repair service to a franchised dealer. That dealer is likely to automatically check the manufacturer’s computer records to determine if the car is still under warranty and will inform the consumer if the odometer is inaccurate.

Automobile Fraud: 2.2.8 Checking a Motor Home’s Engine Hour Meter

Some motor homes contain a meter that indicates the number of hours the home has been driven. An approximation of the number of miles driven can be derived by multiplying the number of hours driven, as indicated on the meter, by an average speed at which such a vehicle is usually driven.107

Automobile Fraud: 2.2.9.1 Finding an Expert

In lieu of or as a follow-up to a lay inspection, one can have the car inspected by an expert. Mechanics typically have more expertise with vehicle drivetrains and those that work on the frame and body might have more insight regarding prior wreck or other structural damage. Depending upon the case, an expert might need to be well versed in both areas.

Automobile Fraud: 2.2.9.3 Inspection Procedures and Techniques

In any case of automobile fraud, but particularly in the case of odometer tampering, the expert should treat the car as a crime scene. Disassembling the odometer to inspect it will probably obliterate the signs that someone had disassembled the odometer previously. Each step should be documented and photographed. Small details, such as pry marks, fingerprint smudges on the roll numbers or elsewhere, scratches on the face of the numbers, marks on screw heads, and dust disturbances should be photographed with magnification.

Automobile Fraud: 2.2.9.4 Defense Inspections

Often, after litigation has begun, the opposing party requests the opportunity to perform its own inspection of the vehicle. In lemon law litigation, this provides an opportunity for an unscrupulous party to correct defects in the vehicle, and many attorneys insist on strict ground rules as a condition of the inspection.116 By contrast, if the problem is that the vehicle is a rebuilt wreck or has a rolled-back odometer, surreptitious repair is not likely to be a concern, as these defects are not repairable.

Automobile Fraud: 2.2.10.1 The New Title

The consumer’s title will be held by the consumer, by the consumer’s lienholder, or by the state department of motor vehicles (DMV). This title will be in the consumer’s name. When the consumer purchased the car, the vehicle’s prior title was assigned to the consumer, and this old title was turned into the DMV to obtain a new title.

Automobile Fraud: 2.2.10.2 Other Documents Relating to Title

The consumer usually will not retain a copy of the old title transferred to the consumer. In most cases the original old title is sent to the registry of motor vehicles to obtain a new title. Nevertheless, sometimes the dealer provides the consumer with a copy of the old title, or with an extra copy of an odometer disclosure. When a vehicle transfer involves a power of attorney, the consumer must receive a copy of the power of attorney.119

Automobile Fraud: 2.2.10.3 Repair Documents

A vehicle’s recent repair history may be useful in indicating possible lemon laundering, salvage history, or an odometer rollback. Certain mechanical problems that normally occur only when a car has more mileage than the odometer presently reads might indicate a rollback. A chronic repair problem may indicate a defect that was unaddressed and resulted in a manufacturer buyback. Certain other repair problems, such as steering issues, may indicate a salvage history.

Automobile Fraud: 2.2.11 Used Car Pricing Guides

A number of commercially sold used-car pricing guides are available in libraries, banks, credit unions, and on the internet. Examples are the Kelley Blue Books or Red Books and the National Automobile Dealers Association (NADA) Official Used Car Guide.

Automobile Fraud: 2.2.12 Advertisements

Locating any advertisements for the vehicle can lead to additional claims. An advertisement that represents a rolled-back vehicle as “low mileage,” or that misrepresents any other information, such as the car’s make, model, year, VIN, or transferor, gives rise to a claim under the federal odometer statute.126

Automobile Fraud: 2.3.1 When and When Not to Use Summary Title Reports

A car’s title history can reveal much about the car’s past, including evidence of a salvage history, lemon laundering, an odometer rollback, or misrepresentation of prior use or the number of prior owners. A true title search requires the searcher to trace back to the car’s first title, and to obtain copies of each title and related documents pertaining to the car, which may involve obtaining titles from multiple state departments of motor vehicles.

Automobile Fraud: 2.3.2 Carfax

Carfax131 purchases computer records showing title histories and also registration and other data from all fifty state departments of motor vehicles (DMVs) and from the Canadian provinces. It also obtains odometer readings from some vehicle emission inspections, and registration information that indicates if a car was used as a rental, lease, fleet, or government vehicle.

Automobile Fraud: 2.1.4 Undisclosed Prior Wreck Damage

Often a vehicle’s prior history as a wrecked car is concealed from potential buyers. Even if a car has in fact been repaired so that it is mechanically sound and cosmetically clean, the car’s history of serious damage means that its true market value is dramatically decreased.33

Automobile Fraud: 2.1.6.1 Lemon Laundering Described

Cars often have documented histories of mechanical problems, and dealers may sell such cars either misrepresenting or failing to disclose this history. Perhaps the most egregious example is “lemon laundering.” Because of widespread consumer utilization of state lemon laws, manufacturers are now repurchasing thousands of cars every year.53 Lemon laundering is the resale of these defective used cars to unsuspecting consumers without disclosure of their prior history.

Automobile Fraud: 2.1.7 Misrepresentations About Prior Owners or Prior Use

A typical used car sales pitch is that a car has had only one prior owner who took excellent care of the car. Cars with unusually low mileage may be termed demonstrators or executive cars. In either case, the implication is that the prior owners were happy with their cars and took good care of them.

Automobile Fraud: 3.2.2 Titling a New Vehicle

A new car is issued a manufacturer’s certificate or statement of origin (MSO) at the time of production. Although attempts to use electronic MSOs were begun as early as 1992, under which manufacturers would send electronic MSO data to dealers and to the National Insurance Crime Bureau (NICB),3 paper manufacturer’s certificates of origin remain the standard and in many states are required.

Automobile Fraud: 3.2.3 Obtaining a New Title After Purchasing for Use

Any time someone purchases a car for use (as opposed to for resale), that purchaser must obtain a certificate of title in their own name.5 Consequently, whenever someone purchases a used vehicle from either another individual or from a dealer, that individual is assigned the existing certificate of title on the vehicle, and that existing certificate is presented to the state to exchange for a new certificate in the new owner’s name.

Automobile Fraud: 3.2.4 Title Transfers to Dealers and Others Purchasing for Resale

In most states those obtaining possession of a vehicle with the intent to resell it (for example, dealers) do not have to obtain a new title in their own name, but may do so if they wish. Although it is not usual, there are a number of reasons why a dealer will obtain a new title in its own name. Some are legitimate, such as when state law requires a dealer to obtain a new title when ownership is transferred or when all the assignment lines are filled up on the old title,9 or when state law requires a new title after a repossession.

Automobile Fraud: 3.6.6 Timing Requirements for Temporary Tags and Registrations

If a dealer has not completed the title documents for the transfer of ownership, then issues may arise as to how a consumer can legally drive the vehicle. If ownership remains with the dealer, and the consumer is only conducting an extensive test drive, then the consumer can operate the vehicle using the dealer’s plates. But if ownership has passed to the consumer, the consumer will either need temporary tags and registration, or an immediate transfer of the title document.