DMV is seeing fraud in unlicensed dealers

Wisconsin DMV’s Dealer and Agent Section has 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, because of failure to maintain business facilities.

Other revocations were from 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.

“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,” said Wisconsin DMV administrator Tommy Winkler.

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 percent. More than 90 percent 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.

The DMV now has an online process to report complaints, at wisconsindmv. gov.