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Automobile Fraud: 2.1.11.2 Falsifying the VIN

The VIN can appear in numerous places on a vehicle, with those locations varying with the make and model. Depending on the sophistication of the fraud operator some, but not all, of those VINs will be replaced with the false VIN. In general, if a vehicle has a particularly high value, one can expect an astonishingly expert job of falsifying most of these VINs. In other cases, the fraud will be obvious to anyone looking for it.

Automobile Fraud: 2.1.11.3 Falsifying the Title

Typically a falsified VIN will be accompanied by a falsified title. A thief will not be in possession of the vehicle’s title, and the old title will have the true VIN anyway. There are any number of complicated schemes to create a bogus title. One increasingly common approach is to steal blank titles from the state department of motor vehicles (DMV) and then fill them in with fake information. For example, one report found that 1700 blank titles were stolen from the Arizona department of motor vehicles.

Automobile Fraud: 2.1.11.4.1 Examining the VIN on the vehicle

The difficulty of proving and spotting VIN fraud will depend on the sophistication of the fraud operator. Look at the VIN plate that has been replaced. Scratches, warping, and loose rivets are a dead giveaway. Manufacturers also use special rivets, and these should be compared with the rivets used to attach the VIN plate. For example, General Motors cars have a rosette pattern on the VIN plate rivets.

Automobile Fraud: 2.1.12 Used Cars Sold Without Airbags

A growing problem is the sale of used vehicles without disclosing that their air bags are missing. One study estimates that four percent of deployed air bags are not replaced, meaning that about 40,000 cars are returned to the road each year without air bags. This problem has been exacerbated by a past shortage of airbags due to the large number of recalled Takata airbags that had to be replaced in 2018.84

Automobile Fraud: 5.1.1 Scope of This Chapter

This chapter examines federal and, to a lesser extent, state requirements relating to odometers and mileage representations. The federal requirements are found in the Motor Vehicle Information and Cost Savings Act, also referred to as the Truth in Mileage Act or Federal Odometer Act, and referred to herein as the “Federal Act” or “Act.” State odometer statutes also create certain additional requirements not found in the Federal Act.

Automobile Fraud: 5.1.2 Overview of the Federal Act

The Motor Vehicle Information and Cost Savings Act,1 also referred to as the Truth in Mileage Act or Odometer Act or Federal Odometer Act, was passed by Congress in 1972, was amended in 1976, 1986, 1988, 1990, and was recodified in 1994.

Automobile Fraud: 5.1.4 NHTSA Interpretations of the Act

The Federal Act requires the National Highway Traffic Safety Administration (NHTSA) to issue regulations specifying in more detail the Act’s disclosure requirements, and NHTSA has enacted such regulations.20 NHTSA elaborates on its regulations in Supplementary Information that accompanies Federal Register publication of regulatory changes.

Automobile Fraud: 5.2.1 Persons Who Must Comply with the Federal Act

The Federal Act’s provisions apply to all “persons.” The term person includes “corporations, companies, associations, firms, partnerships, societies, joint stock companies and individuals.”24 Consequently, those that must comply with the Act are not limited to dealers or auction companies, or even transferors.25 The term also includes employees or agents of car dealers,26 and even those uninvolved with the sale of vehicles.

Automobile Fraud: 5.2.2 Covered Motor Vehicles

The Federal Act applies to “motor vehicles,” which is generally defined as a vehicle driven by mechanical power and manufactured for use on public streets.29 The National Highway Traffic Safety Administration (NHTSA) exempts certain vehicles from the Act’s disclosure requirements,30 but even a vehicle exempted from the disclosure requirements is still covered by the Act’s other provisions.

Automobile Fraud: 5.2.3 What Is an Odometer?

In general, the Act pertains to vehicles with odometers. The Act defines an odometer as “an instrument for measuring and recording the distance a motor vehicle is driven, but does not include an auxiliary instrument designed to be reset by the operator of the motor vehicle to record mileage of a trip.”34 The Act’s definition of an odometer was amended in 2012 to include not only an “instrument” but also a “system of components.”35

Automobile Fraud: 5.3.1 Disconnecting, Resetting, or Altering Odometers

The Act provides that a person may not “disconnect, reset, or alter or have disconnected, reset, or altered, an odometer of a motor vehicle intending to change the mileage registered by the odometer.”38 Although actual alteration of the odometer must be shown,39 the plaintiff need present only circumstantial and not direct evidence that the defendant did the altering.40 In most cases, courts will infer odometer tampering when:

Automobile Fraud: 5.3.3 Selling of Unlawful Odometer Devices

The Act provides that a person may not “advertise for sale, sell, use, or have installed a device that makes an odometer of a motor vehicle register a mileage different from the mileage the vehicle was driven, as registered by the odometer within the designed tolerance of the manufacturer of the odometer.”58 Common tools used to roll back an odometer, particularly older mechanical odometers, have other legitimate uses, so their sale is unlikely to be found to violate the Act.

Automobile Fraud: 5.4 Repair or Replacement of an Odometer

The Act authorizes service, repair, or replacement of an odometer as long as the odometer reading remains the same as before.72 If the mileage cannot remain the same, the repair person must adjust the odometer to read zero, and the car’s owner or the owner’s agent (for example, the repair person) must attach a written notice to the vehicle’s left door frame,73 which specifies the mileage before the service, repair, or replacement, and the date of the service, repair, or replacement.

Automobile Fraud: 5.5 False Statements Made Outside the Disclosure Form

A false statement on a required disclosure form violates the Act’s disclosure requirements.79 In addition, the Act states that a person who transfers ownership of a vehicle may not “give a false statement to the transferee in making the disclosure required by [NHTSA’s odometer disclosure] regulation.”80 This language covers not just false statements made on the disclosure form, but false statements made in connection with making the disclosure.

Automobile Fraud: 5.6.1 Introduction

The Act’s disclosure requirements are central to the Act’s effectiveness. Even if a transferor has not tampered with an odometer (in fact, even if an odometer was never rolled back), a transferor may violate the Act by violating the disclosure requirements.88 Disclosures are important because they create a paper trail of the odometer reading at each transfer, facilitating investigation of odometer fraud. Disclosures also provide the transferee with important information, such as that the odometer reading is not accurate.

Automobile Fraud: 5.6.2.1 In General

Unlike other Act provisions that apply to any person, the disclosure provisions create legal duties solely for transferors of a car’s ownership,91 for lessors and lessees when a leased car is transferred to a third party,92 and for dealers, distributors, and auction companies concerning the retention of certain records.93 In addition, transferees acquiring a motor vehicle for resale also have obligations under the disclosure requirements.

Automobile Fraud: 5.6.2.2 Transferor and Transferee

The NHTSA regulations define transferor and transferee broadly to include not only the persons transferring and receiving the car’s title, but also “any person who, as agent, signs an odometer disclosure statement” for the transferor or for the transferee.96 This definition recognizes the role that auction houses and dealer’s employees have in transmitting and receiving odometer statements.

Automobile Fraud: 5.6.2.3 Lessees

The regulations place certain disclosure requirements on lessees (not just on the lessor).103 The regulations define lessee as “any person, or the agent for any person, to whom a motor vehicle has been leased for a term of at least 4 months.”104

Automobile Fraud: 5.6.3.1 Transfers Broadly Defined

By using the terms “transferor” and “transferee,” the Act and regulations make clear that disclosures must be made each time a car’s title changes hands, even if the transfer is from dealer to dealer. Unlike many consumer statutes that require disclosures only to consumers, odometer disclosures are required for any change of title, no matter the nature of the parties involved in the transfer.

Automobile Fraud: 5.6.3.3 When Vehicle Sold at Auction

An auction company does not typically take title to cars sold through its auction. Instead, title passes directly from the seller who provides the vehicle to the auction to the buyer who purchases the vehicle at the auction. In that case, the auction makes no odometer disclosures because it is not a transferor.118 For administrative convenience the auction company may act as agent for the transferor or transferee in making and signing the disclosures on the old title or reassignment form.