Odometer Fraud Case May Lead to Stiffer Penalties for Some Offenders

An NBC 5 Consumer Investigation on odometer fraud prompts one division of the Texas Department of Motor Vehicles to recommend consumer-friendly changes to state law governing salvage dealers.

These changes would protect consumers by giving the state tougher tools of enforcement against would-be violators.

This potential change stems from a case against a DFW-area salvage dealer which wound up in small claims court then in the hands of the DMV.

It started last year when Kristin and Ferron Young turned to Craig’s List when they needed a car on a tight budget.

"We needed something that we felt like would be good for the family,” Kristin Young, mother of a kindergartener and a newborn, said.

They found an ad for a 2000 Honda Accord, which described the car as very clean with 101,000 miles.  After seeing the car, they bought it for $3,200.

“We ended up choosing the one that we bought because it had lower mileage,” said Young.
The seller, salvage dealer Michael Eke, also had assurances. He said the car had been cared for and had only been in a little crash. But on the drive home they said they noticed problems immediately.

The next day, the Youngs bought a CARFAX report, which revealed at the car’s last state inspection it had 160,000 miles.

Odometer fraud costs consumer more than $1 billion a year, according to the National Highway Traffic Safety Administration.  But it can be difficult to prove, especially in older vehicles. That didn’t stop the Youngs from finding the truth. They ultimately discovered the car had been totaled and sold to salvage. The insurer gave them a picture of the odometer at the time of the wreck. It read 167,000 miles.

Records show shortly after that, Eke bought the car, fixed it up and sold it to the Youngs.

“Why didn’t I see the red flags?” said Young.  “I was pretty upset about it and just frustrated.”

The Youngs took Eke to small claims court and ultimately won. The judge ordered Eke to pay back the cost of the car, with interest and court costs.

“We just have no idea if we’ll ever see a dime,” she said.

To date, they haven’t.

But the Youngs’ case didn’t end with the court judgment.

The Texas DMV also opened an investigation, which it does when consumer file complaints.

“In this particular case, the consumer came forward to us with your help and we found a lot of problems that are violations that we will be pursing,” said Bill Harbeson, DMV’s director of enforcement.

Harbeson said by law, Eke should never have been selling cars in the first place.

“He does not have a license to sell motor vehicles,” Harbeson said.

Records from the DMV case showed Eke told investigators that "he didn't know anything was wrong until he was served with the civil suit."

And he didn't pay the Youngs after the judgment because he was "under the impression" he'd get the car back. But he did say he replaced the odometer and informed the Youngs. A point Kristin disputes.

And federal law requires if an odometer is replaced, there must be a sticker placed on the driver's door saying so.

Kristin said there was no such sticker on the car.

Earlier this month a DMV enforcement attorney sent a letter to Eke advising him of seven violations – including he "falsified the description of repair work," "failed to attach a written notice of replaced odometer," and "failed to keep or maintain records."

The letter also recommended revoking his salvage license and a civil penalty of $52,000.

”This would be one of the larger fines simply because of the number and nature of the violations,” Harbeson said.

NBC 5 Investigates Consumer Unit contacted Eke. He declined to answer questions or say how he planned to move forward.

His lawyer also declined to comment on the case other than to say Eke denied the allegations. However his attorney did confirm that he contacted the Youngs to offer a settlement but would give no further details.

Eke has until Oct. 14 to request a hearing that could reduce his penalties. The state will make a final determination after that time.

“I would just hope for change, and if not then I would hope for justice,” Kristin said. “I'm grateful that they looked into this case.”

The case also led Harbeson to suggest changing state law for salvage dealers giving the state more power to charge a dealer in cases of consumer fraud, something it has not had before.

“This particular case, the facts in it, drove me to be recommending to the board that we have an allegation for willfully defrauding a consumer,” Harbeson said.

That could give the state more enforcement ammunition, but it could take at least seven months to see any changes.

Here is the DMV's advice to anyone buying a used car.

  • Ask to see the title and identification from the seller.
  • Research the title.  The DMV provides links to service where you can check the title for just a few dollars (provide DMV http://txdmv.gov/motorists/buying-or-selling-a-vehicle/title-check-look-before-you-buy )
  • Run a vehicle history from a company like CARFAX.
  • Take it to an independent mechanic.  If that mechanic sees major issues consider not buying that vehicle.

Original Article: http://www.nbcdfw.com/investigations/Odometer-Fraud-Case-May-Lead-to-Stiffer-Penalties-for-Some-Offenders-276968221.html