Preliminary Report: The Incidence Rate of Odometer Fraud

Christina Morgan
Abstract
The report estimates the probability of an odometer rollback during the first 11 years of a passenger vehicle's life to the extent it can be detected in title transfer and other odometer reading data. The analysis uses a nationally representative sample of 10,000 passenger cars, pickup trucks, vans and sport utility vehicles and a national vehicle history database to identify vehicles with odometer discrepancies that suggest rollback - i.e., odometer readings on two separate occasions, and the later reading has the lower mileage. The rate of odometer fraud over the life of the vehicle is 3.47 percent (confidence bounds from 2.68 to 4.26 percent). That is a 3.47 percent chance that a vehicle would have its odometer rolled back at any point during the first 11 years of its life. There are approximately 452,000 cases of odometer fraud per year in the United States. This study also estimates the difference between the inflated prices that consumers actually paid for the rolled-back vehicles and the prices they would have been willing to pay if they had known the true mileage. Those costs average $2,336 per case of odometer fraud. Given 452,000 cases per year in the United States, that amounts to $1,056 million per year (confidence bounds from $737 million to $1,376 million).