Given the prevalence of vehicle history reports such as CarFax and AutoCheck, and consumers’ demand for the same when they purchase used vehicles, an issue has arisen regarding a dealership’s obligation to report a mileage discrepancy when that discrepancy is solely created by a third-party notation on a vehicle history report. The most common situation usually arises where a dealer purchases a vehicle at auction, where the vehicle is not announced as having “true miles unknown,” and when the dealership runs a vehicle history report it notices that a third-party has reported mileage for the vehicle that creates a discrepancy in the mileage history for that vehicle. More often than not, that reporting by the third-party was done in error and there is no evidence in the vehicle itself of an actual odometer rollback. The question that is presented is whether the dealership is now obligated to disclose that the vehicle’s true mileage is unknown or whether it can rely on the lack of a disclosure from the auction.
49 USCS § 32705 requires that in all motor vehicle sales in the United States, that the person transferring ownership of the vehicle disclose the mileage on the odometer and disclose whether the vehicle’s true mileage is unknown “if the transferor knows that the odometer reading is different from the number of miles the vehicle has actually traveled.” (Section 32705 (a)(1)(A) and (B); see also 49 C.F.R. § 580.5(e).) California has similar reporting requirements that largely track the federal requirements. (Cal. Veh. Code §§ 1819, 4751(g), 5900(b) and 5901(b).) When a violation of federal odometer disclosure law is alleged by a private party, a plaintiff must prove an intent to defraud as to the vehicle’s mileage. (Ioffe v. Skokie Motor Sales, Inc. (2005) 414 F.3d 708.) The law does not impose strict liability on dealers who violate the reporting requirements and a dealer is only liable to a private person if the dealer violates the law with the intent to defraud. (Nigh v. Koons Buick Pontiac GMC, Inc. (2001) 143 F.Supp.2d 563.) Similarly, California law only will impose liability when a dealer “has knowledge that the mileage displayed on the odometer is incorrect…” (Cal. Veh. Code § 5901(b).)
49 USCS § 32710 allows private parties to file suit for violations of federal odometer reporting requirements. Penalties for violations can be three times the actual damages, or $10,000.00, whichever is greater. (Section 32710(a).) Additionally, should a private party prevail on this claim, they would also be entitled to attorneys’ fees and costs when judgment is entered in their favor. (Section 32710(b).) Section 32710 reiterates that for there to be civil liability, there must be an “intent to defraud.” (Section 32710(a).)
With this in mind, how should a dealer proceed when a private party causes a notation on a vehicle history report that appears to have been done in error? The safest approach is likely an approach which fully discloses everything that is known and seeks to remedy the issue with the vehicle history report company. First and foremost, when the dealer learns of the issue, and before the vehicle is sold, the dealership would be well served to reach out to the vehicle history report company in an attempt to correct the error. For CarFax, requests to research notations on CarFax reports can be made through CarFax’s website. (https://support.carfax.com/c_datarequest.) After that, a written disclosure to the customer, with the customer signing the same, is good practice. Lastly, the dealership should have the vehicle inspected by a franchise dealer in an attempt to determine if the vehicle shows any sign of odometer tampering. If all of this has been done, the dealership is likely safe in not branding the vehicle as a “true miles unknown” vehicle. This of course assumes that the discrepancy is created by a non-governmental agency, such as a private repair facility. If the discrepancy is created by inconsistent DMV reported mileage, the dealership is likely required to transfer title to the vehicle with a “true miles unknown” designation.