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Automobile Fraud: 5.6.5.6.4 Subsequent purchaser’s access to first power of attorney

A subsequent purchaser who grants a “second” power of attorney to a dealer will receive a copy of the power of attorney that includes not only Part B (the dealer’s disclosures to the subsequent purchaser), but also Part A (the prior seller’s disclosures when it transferred the vehicle to the dealer).213 On the other hand, if only a “first” power of attorney is used, anyone purchasing that vehicle from the dealer will not see the prior seller’s power of attorney, and will not be able to check if the dealer properly transferred the disclosure f

Automobile Fraud: 5.6.5.7.2 Prior NHTSA state approvals

Before NHTSA developed these standards for state electronic titling and disclosure systems, NHTSA had authority to approve alternative methods of odometer disclosure proposed by a state, provided that the proposal was consistent with the purposes of the Act’s disclosure requirements.226 Florida and Oregon’s requests in the 1990s were denied,227 but starting in 2009 NHTSA approved requests by Florida, New York, Texas, Virginia, and Wisconsin to adapt their method of making odometer disclosures to

Automobile Fraud: 5.6.6.1 General

The content of the required mileage disclosures is essentially the same, whether made on the title, on a power of attorney, on a reassignment document, on a separate disclosure statement, or electronically.236 Model disclosure forms for these different situations are found in Appendices B, C, and E of the National Highway Traffic Safety Administration (NHTSA) regulations, reprinted in

Automobile Fraud: 5.6.6.2 Disclosure When Odometer Has “Turned Over”

Since at least 2000, car odometers have had six digits, so that an odometer will not “turn over” (that is, exceed its mechanical limits) until a million miles are reached. But, for older cars, odometers contained only five digits, so that the odometer would turn over at 100,000 miles. As these cars from the 1990s are exempt from disclosure requirements because of their age, the disclosure that an odometer has turned over is today only applicable when a transferor waives the exemption by making the disclosure.246

Automobile Fraud: 5.6.6.4 Dealer Must Have Sufficient Basis to Claim That Odometer Is Not Accurate

Some dealers, in an apparent attempt to avoid liability under the Act, routinely mark all their disclosure forms to indicate that the odometer reading is not the actual mileage. In a series of opinion letters dating back to 1976, NHTSA has taken the position that such disclosures violate the regulation.261 A NHTSA opinion states: “[T]he practice of routinely certifying that the odometer reading is not the actual mileage and should not be relied upon, significantly inhibits enforcement of the federal odometer law.

Automobile Fraud: 5.6.6.6 Cars Sold for Salvage

NHTSA originally took the position that when vehicles were sold for parts or salvage no odometer disclosure need be made.278 The determination that a vehicle was sold for parts or salvage depended on the good faith of the transferor. NHTSA then discovered that vehicles declared a total loss and sold for salvage were sometimes repaired and resold for use on the road.

Automobile Fraud: 5.6.6.7 When a Used Vehicle Is Assembled from Parts or Restored

To minimize the possibility of fraud, NHTSA requires that the actual mileage be disclosed even when a major part, such as an engine, has been replaced.284 When a vehicle has been reconstructed from several parts, the odometer should be set to that of the major mechanical or structural part with the highest mileage, if that is known, or to the mileage on the chassis.285 The Arkansas state odometer act has been interpreted even more strictly, requiring mileage disclosures not only for the front pa

Automobile Fraud: 5.6.6.8 When a Repair Shop Resets the Odometer

The Act requires that, after servicing, if the odometer does not reflect the same mileage as before, then the odometer must be adjusted to zero, and a written notice must be attached to the left door frame specifying the date of service and the mileage before service.289 In that case a transferor, in disclosing the mileage at transfer, does not indicate the sum of the mileage on the door frame sticker and the mileage on the odometer.290 The transferor instead discloses the mileage shown on the r

Automobile Fraud: 5.6.6.9 When Vehicles Have Been Towed

Owners of large recreational vehicles taking long trips may tow automobiles behind them to use while the recreational vehicles are parked at campgrounds. Some commercially available towing devices cause the odometers on the towed cars not to register. In fact, the disconnection of the odometer is advertised as a feature of these devices.

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