legal corner
Odometer Problems Don’t Go Away With “Exempt” Status by Michael
Dealer Question: I’ve re-
ceived an attorney-demand letter involving an issue of the true mileage of a vehicle I sold that fell under the mileage “exempt” rule because it was over 10 years old. Doesn’t the “exempt” status remove any potential liability for mileage discrepancies? Answer: No. “Exempt” means the vehicle is not subject to the federal odometer law disclosure requirements of placement of mileage on the title certificate. But that doesn’t necessarily affect the possible implications of the Texas Deceptive Trade Practices Act (DTPA) prohibitions on misrepresentation of the characteristics and qualities of a product sold or leased.
I
t is a fact of life that purchasers of motor vehicles consider the number of miles a vehicle has travelled to be an important piece of information in determining the value of that vehicle. And, when a buyer finds out after the purchase that the vehicle has more miles than appeared on the odometer or more than was otherwise disclosed, that buyer feels cheated. Certainly, the value of low mileage was known to thieves who have rolled back odometer mileage on vehicles to increase the prices they can sell them for. And this information was known to congress when it passed the federal odometer tampering and disclosure laws. Consumer groups and plaintiffs’ attorneys are well aware of the opportunities for litigation
February 2021
T e x a s
D e a l e r
that odometer issues give rise to. The importance to vehicle buyers of having correct information on a vehicle’s mileage is also brought home to dealers and vehicle auctions when mileage discrepancies arise after a sale. Federal odometer law prohibits disconnecting, resetting, or altering an odometer with the intention to change the mileage registered by the odometer, and operating a vehicle with the odometer disconnected, with the intent to defraud. Also, the law requires that a seller of a vehicle disclose the cumulative mileage registered on the odometer, or, if the seller knows that the registered mileage is incorrect, disclose that the true miles are unknown. The federal disclosure can be made as “exempt” if the vehicle falls under the exemption for older vehicles depending on its model year. Prior to January 1, 2021, the exemption applied to vehicles 10 years old or older. A new rule from the National Highway Traffic Safety Administration (NHTSA) now changes the exempt age to 20 years, reflecting the increasing average age of vehicles still in operation. The
Dunagan
W.
TIADA GENERAL COUNSEL
Federal odometer law prohibits disconnecting, resetting, or altering an odometer with the intention to change the mileage registered by the odometer, and operating a vehicle with the odometer disconnected, with the intent to defraud. new rule requires an odometer disclosure for every transfer of ownership for vehicles up to 20 model years old, beginning with model year 2011 vehicles (thus 2011-year models will be subject to federal disclosure through 2031). Modelyear-2010 and older vehicles remain subject to the previous 10-year rule. The penalties for violation are fairly steep. A civil penalty can be assessed of up to $2,000 per vehicle involved up to a total of $100,000, plus prison time, in addition to 19
