Road Warrior: Low miles? Used car may be too good to be true

Hardly anybody I know pays much attention to the odometer reading when buying a used car — unless, of course, it’s exceptionally high. After all, low mileage is usually the main qualifier when buying a pre-owned vehicle because it suggests the two of you will likely enjoy a few more good years before it gives you serious trouble.

But judging by an arrest for odometer fraud in South Hackensack a week ago, ignoring a low-mileage reading might mark the beginning of serious trouble. “Odometer fraud? How’d they do that?” said Sal, an otherwise astute car owner I know from Barnegat.

Like me, Sal thought rolling back odometers was the kind of crime that all but disappeared when computers were introduced in most cars around the end of the 20th century. Those of us who began driving when hood ornaments were still popular remember how amateur mechanics would break into the odometer housing behind the dashboard and roll back the miles by hand.

Those days are long gone. And so is the housing, said Robert Foster, an officer in a consortium of state investigators called the National Odometer and Title Fraud Enforcement Association.

“It’s easier to do now than it was before computerization,” said Foster. “With the right kind of knowledge and software, a mechanic can get into the onboard computer and reset the mileage to anything he wants.”

Theoretically, it doesn’t always require a master mechanic to do this dirty work.

“Diagnostic and computerized equipment can be purchased online,” said Maureen Parenta, a spokeswoman for the Bergen County Prosecutor’s Office. “And there are how-to blogs and Internet videos” that can easily be accessed.

In the South Hackensack case, Alon Levin, owner of HQ Custom Design, was charged for allegedly using diagnostic equipment to access vehicle computers and lower odometer readings by tens of thousands of miles since 2012. It’s unclear which kinds of vehicles were affected, but Levin’s company website said the business specializes in customizing big-ticket luxury vehicles. Because the investigation is ongoing, Parenta couldn’t disclose how the fraud was uncovered, but police say investigations usually are initiated by sellers who belatedly realized they’ve paid more than several hundreds of dollars to buy vehicles with mileage reductions in the tens of thousands.

The losses don’t always stop there.

If a car is financed, the bank or finance company will likely increase the interest rate on the car loan. Insurance companies can hike the premium, too. And maintenance costs will likely rise faster for a car with 70,000 miles than it would have if it had been driven just 40,000.

Still, turning back an odometer requires a little more than a screwdriver and a little online know-how.

“Yes, the procedure only requires a scanner and the right software,” said mechanic Brian Shanahan, who owns Washington Garage in Bergenfield. “But the logistics aren’t so easy. The software is proprietary. If you work on cars for a living, you need authorization, which usually means you have to be a licensed franchisee who’s legally bound by a code of ethics. If you do something unethical or illegal, you lose the license, which means you can’t work on certain car makes. Essentially, you can lose your business.”

To say nothing of the legal penalties, especially for cases involving hundreds of vehicles.

Foster, an investigator for the Texas Department of Motor Vehicles, has helped in federal prosecutions that put violators in jail for five years or more. “Fines can be levied per vehicle and they can run in the tens of thousands,” he said. “On top of that, restitution can be ordered for thousands more.”

The National Highway Traffic Safety Administration estimates that nearly 500,000 annual usedcar sales in the United States involve odometer fraud. The cost to the American consumer: Easily $1 billion a year.

In the last 10 years in New Jersey, courts have individually held several dealerships responsible for cheating buyers out of $1 million or more. Frequently, these cases cross state lines. In one 2008 settlement, a defendant pleaded guilty to electronically rolling back odometers as much as 100,000 miles in cars sold in Brooklyn and Hackensack. One Ramsey dealer and its affiliates were initially assessed more than $900,000, a figure that was later reduced to $250,000. Last month, the state sued a Lodi used-car dealership — European Auto Expo — for deceptive practices that included one sale in which mileage allegedly was rolled back 60,000 miles.

Federal law requires that sellers register the mileage on the odometer at the time of sale. If the mileage is incorrect, a seller must disclose that fact to the buyer in a statement. But cars more than 10 years old are exempt.

“That loophole is more significant today than when the law was passed,” said Foster, “because cars last an average of about 11½ years now.”
Various law-enforcement groups are lobbying Congress to close the loophole.

Meanwhile, what can car buyers do to protect themselves?

NHTSA suggests asking to see the title and maintenance reports to ensure the mileage reported on these documents is consistent with mileage on the odometer. Foster suggests carefully checking brakes, clutch pedals and other vehicle components for wear to determine if they show wear consistent with odometer mileage.

“And always get a CarFax vehicle history report when buying a used car,” he added. “In most cases, it contains the information needed to make a wise purchase.”

Original Article: http://www.northjersey.com/news/road-warrior-low-miles-used-car-may-be-too-good-to-be-true-1.1556117