The secondhand car market is costing buyers £85m a year, according to the Office of Fair Trading (OFT).
However, despite this the OFT has reported that the current level of legislation is sufficient, saying instead that more should be done to ensure that everyone is aware of their responsibilities.
The report follows on from 72,000 complaints lodged last year about unscrupulous sellers.
It found that the market “does not work well for consumers”, making it the most complained about business sector in the UK.
The OFT's report found that consumers are potentially overpaying around £580m a year as a result of illegal clocking, while some dealers pretend to be private sellers to evade their legal obligations to consumers.
Also, one in 11 car dealers rely on illegal disclaimers about the car's history and condition, such as saying that a car is 'sold as seen'. Many dealers also fail to disclose what mechanical and other pre-sale checks they have carried out, according to the OFT.