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New York Class Action Alleges Subaru Odometers Inflate Mileage

Judge allows lawsuit to proceed

By Jon Hood
ConsumerAffairs.com

August 28, 2009
For years, buying a car--especially a used one--has entailed a number of precautions. One of those was making sure that the vehicle's odometer display was correct, given the tendency of car dealers and individual sellers to "roll back" mileage in an effort to make the car look less broken-in.

In recent years, new technology has added an extra measure of protection for car buyers. Carfax, the popular website that checks cars' total loss and lemon status, among other things, also offers a free odometer check to alert customers to vehicles with inaccurate mileage readings.

Now, a class action lawsuit against Subaru makes allegations on the other end of the spectrum: that the carmaker sold and leased cars whose odometers subsequently overstated mileage. Why would an auto manufacturer want to sell cars that aged prematurely?

According to the lawsuit, filed in federal court in New York's southern district, Subaru had plenty of incentive to inflate the cars' mileage as quickly as possible. Specifically, the suit says that the excessive mileage readings allowed Subaru to duck claims from owners whose cars were purportedly outside their warranty, and to charge lessees with "excessive mileage" fees when they turned their cars back in.

The action, led by class representatives Peter Vasilas, Scott Diamond, and Robert Kasindorf, outlines a complex process by which Subaru's odometers allegedly overstate mileage on a regular basis. According to the suit, the odometer's readout is dictated by an "external device that recognizes the electronic impulses generated by the vehicle's transmission, and converts the impulses to a mileage figure." The plaintiffs further allege that Subaru purposefully used this device to inflate odometer readings, in spite of the fact that the odometers were capable of reflecting the vehicles' actual mileage.

When suspicious Subaru owners tried to notify the company of their concerns, Subaru responded that the odometers were working as intended. Subaru pegged the odometers' "tolerance range"--a concept similar to margin of error--at plus or minus 4 percent. Thus, Subaru maintained that the mileage readings were substantially correct, but that periodic fluctuations were normal and to be expected.

The plaintiffs brought the suit under the Federal Odometer Act, passed in 1972, which prohibits the use or installation of any device whose readout is beyond the odometer's tolerance range. The statute also bars a seller from altering an odometer "intending to change the mileage registered by the odometer."

Earlier this month, Judge George Daniels denied Subaru's motion to dismiss the suit, allowing the class action to proceed. In arguing that the suit failed to state an actionable claim, Subaru insisted that the Federal Odometer Act doesn't apply to original factory-installed odometers that are performing as intended. Daniels disagreed, ruling that whether Congress originally intended the Act to apply to manufacturers is irrelevant. The key issue, Daniels said, is whether the odometer is "deliberately manufactured" to produce an inaccurate readout.

The plaintiffs claim that Subaru has collected or saved millions of dollars because of improperly denied warranty claims or excessive mileage fees from leased vehicles. They are seeking monetary damages as well as the refund of improperly collected fees, and have also demanded that Subaru replace all defective odometers.

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