Wisconsin wholesale car dealers face crackdown for odometer fraud, unlicensed sales

Photo of a cars odometer. (Photo by National Motor Museum/Heritage Images via Getty Images) (Getty Images)

The Wisconsin Department of Motor Vehicles (DMV) says it has found an increasing amount of fraud from out-of-state wholesale car dealers. 

In a press release on Thursday, the DMV said 32 wholesale dealers had their licenses revoked within the past two months because they failed to maintain business facilities. Other licenses were revoked due to unlicensed retail sales to consumers, false title statements and rolling back odometers. 

Odometer rollbacks are a form of fraud where dealers will roll back the number of miles on a vehicle, falsely increasing its value. The DMV says that two of the wholesale dealers it has been investigating rolled back more than 6 million miles in 64 cars. 

"Wisconsin DMV’s Dealer and Agent Section is committed to protecting consumers by investigating complaints, verifying business practices and taking corrective action. 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," Wisconsin DMV Administrator Tommy Winkler said in a statement. "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 DMV says that thousands of wholesale dealers in Centralized Dealer Operations (CDOs) are behind the fraud problem. CDOs are large facilities that can hold several hundred licensed wholesale dealers in one shared space. According to the DMV, these facilities are often only used as a business front and are usually empty. 

Wisconsin is one of a few states that offers wholesale car dealer licenses, which allows businesses to sell vehicles to dealers, and are not allowed to sell directly to the public. The DMV said it had seen a major increase in these licenses since 2018 when CDOs first started appearing in the state. The DMV says that 90% of those dealers live out of state.

The Wisconsin DMV has seen both an increase in wholesale dealer licenses and complaints against said dealers. To make a complaint to the Wisconsin DMV, click here.