Identifying Odometer Fraud in Used Car Market Data

Transport Policy 60: 10–23

39 Pages Posted: 4 Aug 2017 Last revised: 24 Aug 2017

See all articles by Josef Montag

Josef Montag

Charles University, Faculty of Law - Department of Economics

Date Written: November 2017

Abstract

This paper investigates the presence of odometer fraud in the used car market using a large dataset of car sale advertisements from the Czech Republic. The strategic aspects of sale decisions and the practice of rounding odometer readings, however, render the standard statistical tests for fabricated data invalid. I therefore develop and employ a modification of the last-digit test, which has been used to detect fraud in election data. Simulations using the data from advertisements and travel survey data from the United States support the validity of this test under alternative distributional assumptions. The results suggest that suspicious patterns are more prevalent in the segment of cars imported from abroad. I also show that this test can be used at the seller level, which may be of interest to authorities and market participants.

Keywords: Used Car Market, Odometer Fraud, Digit Tests

JEL Classification: K42, R40

Suggested Citation

Montag, Josef, Identifying Odometer Fraud in Used Car Market Data (November 2017). Transport Policy 60: 10–23. Available at SSRN: https://ssrn.com/abstract=3013350

Josef Montag (Contact Author)

Charles University, Faculty of Law - Department of Economics ( email )

nam. Curieovych 7
Prague 1, 11640
Czech Republic

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