Wisconsin DMV's Dealer and Agent Section Uncover Growing Fraud Instances Against Consumers

Friday, February 9th, 2024 -- 11:01 AM

Wisconsin DMV’s Dealer and Agent Section uncovered a growing number of fraud instances against consumers from an influx of out-of-state businesses licensed as wholesale dealers in Wisconsin.

In the last two months, 32 wholesale dealer licenses were revoked due to failure to maintain business facilities. Other revocations were due to unlicensed retail sales to consumers and false title statements and odometer rollbacks, two of the wholesale dealers rolled back more than 6 million miles over 64 vehicles.

“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.

“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.” Behind this growing fraud problem are thousands of wholesale dealers in Centralized Dealer Operations (CDOs). CDOs are large facilities that may house several hundred licensed wholesale dealers at one time within a shared space. 

These facilities are often empty and only used as a business front. Since 2018, when CDOs first appeared in Wisconsin, the number of wholesale licenses has grown exponentially, increasing by 1,194%. More than 90% of those dealers reside outside the state.

Wisconsin is one of the few states that offers wholesale dealer licenses to business owners. A Wisconsin wholesale dealer license allows businesses to only sell vehicles between dealer to dealer. A wholesaler may not sell vehicles to the public.

These types of dealers offer a valuable service to the motor vehicle industry. However, in recent years, Wisconsin has seen a dramatic increase in the number of wholesale dealer licenses and consumer complaints.

DMV now has an online process to report complaints, wisconsindmv.gov/dealercomplaint, to further support car buyers.

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