Odometer fraud resonates across the whole European Union

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Odometer fraud is a real problem and needs a real solution. [Wikipedia]

Belgian system Car-Pass should be introduced across the EU in order to crack down on odometer fraud in secondhand cars, which poses a massive problem, especially in Eastern Europe, writes Tomáš Zdechovský.

Tomáš Zdechovský is a Czech Member of the European Parliament (EPP / KDU-ČSL).

Every year, millions of European customers are affected by so-called mileage fraud. What do we actually mean by that? The odometer fraud is an artificial lowering of the mileage of a car. It is technically simple, cheap to do, and aims to inflate a vehicle’s value by several thousand euros. Odometer frauds in second hand cars poses a massive problem, which affects a considerable number of used cars in Europe – the estimates go as high as 30%, costing European consumers approximately between €5.6 to 9.6 billion per year.

Not being able to guarantee the car’s mileage makes it impossible to assess the true value of second-hand cars, leading to a high level of consumer mistrust. In fact, unsuspecting consumers are not only cheated, but they also face higher repair and maintenance costs and drive cars that are more likely to be unsafe.

For instance, my home country – the Czech Republic – poses a deterrent example of how big of an issue mileage fraud is. If you are in the Czech Republic and buy a second hand car, it is very likely, that you became a victim of an odometer fraud. Because of the internal free trade within the European Union, central and eastern European countries serve as a dumping ground for many cars imported from the west.

As of 2014, 37% out of 220,000 second hand cars sold in the Czech Republic had an odometer that was artificially manipulated, one fifth had experienced a car crash or had an insured event that were not recorded and 17,8 % out of them were actually older than officially stated in their documents. In other words, many customers are misled and deceived without knowing it. Meanwhile, car dealers suffer unfair competition and the entire second hand car business is left with bad reputation. Indeed, the sector generally performs poorly in the European Commission’s Consumer Scoreboard, with second-hand cars consistently ranking as the least trusted product for European consumers.

Unfortunately, the customers do not have many possibilities to check whether the mileage of the vehicles is honest or not. Mileage fraud thereby severely distorts the second-hand car market, tarnishes the reputation of car dealers, may negatively impact the environment and road safety and also leads to tax fraud. Taking steps to reduce mileage fraud would add transparency to the market and could stimulate the used car business and create a sound climate for investments.

The crucial question is: how can we mitigate this type of fraud and is it possible at all? The answer is surprisingly simple and we can find it here, in Belgium. The Belgian Car-Pass system has been extremely successful in clamping down on car clocking. After all, the following figures are more than eloquent. Since the system became operational in 2006, it has dramatically lowered the number of fraud cases from 60,000 in 2005 to a mere 1,197 in 2015. Moreover, since 2006 mileage fraud is punishable by one year in jail.

Inspiration from Belgium

The Belgian system works by removing the incentive for “clocking” the mileage, as any significant changes will be detected. This is achieved through a central database into which mileage readings are fed regularly, when a car goes in for repairs, maintenance or checks. The room for odometer manipulation is drastically reduced, as suspicious readings show up in the car’s mileage history. The system is provided by the non-profit organisation Car-Pass. Since 2006, 6.8 million certificates have been issued and 21 million cars have been recorded since then. There are other countries that have an efficient way to counter the odometer fraud, such as for instance the Netherlands.

Crime does not know borders and thus national systems cannot provide guarantees for imported or exported cars. Therefore, there is a real need for transnational approach to the problem. Nevertheless, we are yet to see active efforts of the Commission to bring the issue on the European level.

I hope that we will have the opportunity to hear the success stories of the fight against the odometer fraud in other European countries soon. Because no permanent solution is possible without joint efforts of all EU member states.