State transportation officials say they’ve seen a sharp rise in the number of out-of-state used-car wholesalers that are violating state law, including by falsifying vehicle title information and rolling back odometers.
Wisconsin is one of the few states that licenses vehicle wholesale companies that sell large numbers of used vehicles to traditional auto dealers, auction companies, metal salvage companies and other wholesalers. They buy most of their vehicles at auctions. State law forbids them from selling to the general public, and they must have a physical presence in the state.
The state Department of Transportation said in a statement Thursday that while wholesalers “offer a valuable service to the motor vehicle industry,” it has “seen a dramatic increase in the number of wholesale dealer licenses and consumer complaints.”
Thirty-two wholesale dealer licenses have been revoked in the past two months because the dealers failed to maintain business facilities in the state, the DOT said.
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The state also has revoked licenses because wholesalers were making sales to the public, rolling back vehicle odometers — including two wholesalers that rolled back more than 6 million miles on 64 vehicles, an average of more than 93,000 per vehicle — and altering vehicle titles to show those lower, fake odometer readings.
Fraudsters can roll back odometers on modern vehicles in several ways, according to the DOT, including replacing the instrument cluster that includes the odometer with instruments that show a lower mileage and tampering with the vehicle’s on-board computer to lower the odometer’s readout. Investigators use vehicle history reports, records from vehicle-titling agencies and service records, among other documentation, to verify that the odometer has been tampered with.
Between July 2019 and January 2024, the DOT said, investigators found wholesalers “rolled back more than 161 million odometer miles on vehicles, which “correlates to approximately $9.7 million in consumer damage.” Since 2019, it has identified at least 1,873 vehicles whose odometers were rolled back by wholesalers, sold by wholesalers to retail customers, or both. At least 15 states have seen such illegal retail sales.
“Wisconsin DMV’s Dealer and Agent Section is committed to protecting consumers by investigating complaints, verifying business practices and taking corrective action,” Wisconsin Department of Motor Vehicles Administrator Tommy Winkler said in the statement. “However, the tremendous growth in the number wholesale dealers, many of whom are out-of-state dealer owners, puts consumers at risk from unscrupulous businesses who abuse their wholesale license. Not only are consumers hurt, Wisconsin dealers who do business the right way are getting a bad name from those who abuse their wholesale license.”
The DOT said key to such fraud are large warehouse-like facilities known as centralized dealer operations, or CDOs, that may house several hundred licensed wholesale dealers at one time within a shared space.
The facilities “are often empty and only used as a business front,” the DOT said in the news release. It provided photos of the inside of one such facility showing rows of empty cubicles.
CDOs first appeared in Wisconsin in 2018, the DOT said, and since then, “the number of wholesale licenses has grown exponentially — increasing by 1,194%,” and more than 90% of those dealers are from out of state.
The DMV has an online portal to report complaints at wisconsindmv.gov/dealercomplaint.