Blockchain could combat mileage fraud
The European Parliament is interested in the new data storage technology to improve consumer confidence in used vehicle mileages.
Blockchain technology could be deployed to help the automotive industry combat mileage fraud in the sale of secondhand cars, according to a report by the European Parliament.
It estimates that as many as 50% of used cars have their odomoters tampered with in order to roll back mileages and illegally boost the value of used cars by €2,000 to €5,000. The fraudulent practice is particularly acute in cross-border trade, which is a growing area of the used car market.
Preventing the fraud should improve the residual values achieved by fleets and leasing companies, by restoring public confidence in the used car sector as a whole, and by levelling the playing field in favour of honest vendors that publish accurate mileages of the vehicles they are remarketing directly to the public.
What is blockchain?
Blockchain is a technology used for storing data. It is based on the principle of multiple databases linked in a chain, each storing identical digital assets (data blocks). Traditional databases store this data on a single platform or server, which makes the data easier to manipulate or ignore. To tamper with vehicle odometer readings stored in a blockchain would require fraudsters to manipulate many different databases.
This secure system now forms the basis for crypto-currencies, such as Bitcoin, and its opportunities for the insurance claims industry are developing rapidly.
The European Parliament said, “The application of blockchain technology may represent another potential solution to be applied to combat odometer tampering, allowing for a more transparent access to odometer figures and tackling two sensitive issues: privacy of data and frequency of data recordings.”
The secure digital logbook
The car engineering and electronics industry claims blockchain would enable the downloading of mileage and GPS data from cars to create a secure ‘digital logbook’. The GPS data would validate mileage data captured and recorded when vehicles are serviced. That data would then be shared among all parties of a blockchain, probably including national government vehicle registers.
According to Bosch, car buyers could then use a smartphone app to check the actual mileage of a car with its odometer display. And vendors could have a certificate issued that testifies to the accuracy of a car’s mileage, in order to improve confidence among potential buyers. It would also be possible to share this certificate over the internet, on an online platform for selling cars, to underwrite trust in e-sales.