Over the last few years, car makers have had to fork over more than $500 million in refunds to customers because of exaggerated fuel economy estimates on new vehicle stickers. In an effort to provide more accurate mileage information to consumers, the Environmental Protection Agency wants car companies to do their mpg testing on the road instead of in the lab.

There are three problems with the current way in which mileage estimates are currently calculated.

First, the testing is done in a lab intended to simulate real world driving conditions. That’s convenient, but not a substitute for actual road tests. It also doesn’t explain why hybrids tend to underperform in the real world while diesel vehicles often do better on the road than in their lab simulations.

Second, for more than three decades, vehicles with the same engine, transmission and weight class could use the same data for their fuel economy labels. This has not been a big problem with traditionally gasoline powered engines, but in hybrid vehicles this has not worked so well. For example, Ford originally took the mileage estimates for Fusion hybrid and used them on its C-Max. But then Ford had to revise that data after our colleagues at Consumer Reports found a significant difference between the C-Max’s stated mpg and their real-world test results.

The third major issue with the current mileage estimates is that the EPA only has the ability to verify about 15% of car makers’ estimates, meaning car companies may be tempted to tweak their lab testing in the hope that they won’t be put under the EPA microscope.

Of course, when the EPA does catch a car maker exaggerating mileage estimates, the penalties can be substantial. In 2013, Hyundai and Kia agreed to pay out nearly $400 million in refunds after overstating mpg figures on some 900,000 vehicles between 2010 and 2012. Earlier this year, Ford revised mpg figures on a number of cars and now faces upwards of $200 million in payouts to consumers.

The Wall Street Journal now reports that the EPA is looking to propose new rules that would require road-testing of vehicles as part of the mileage estimating process. And not merely running the car on a test track and seeing how it does. The EPA wants car companies to measure air-resistance and rolling friction in the real world, rather than in a computer simulation.

“Some auto makers already do this, but we are establishing a regulatory requirement for all auto makers,” Chris Grundler, director of the EPA’s Office of Transportation and Air Quality, tells the Journal.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.