Identity fraud can threaten most types of businesses, and automotive dealerships are also at risk. Auto lenders and dealers who are successfully duped by fraudsters sporting fake identity documents can suffer tremendous losses in a very short span of time. In fact, synthetic fraud in automotive managed to top $1 billion in balances throughout the second quarter of 2019.
Taking preventative measures against automotive ID fraud is crucial for any dealership, but first you have to know what you’re up against.
Types of Automotive ID Fraud
Automotive ID fraud centers on a mix of real and fake information to forge a phony identity and obtain a financed vehicle or utilizing fake IDs to test drive a car. Although fraudsters may choose to completely forge presented ID documents, they also tend to leverage real victims' pilfered information whenever possible. A move to increasingly contactless car sales processes may exacerbate the risks car dealers and lenders face.
Fraudsters looking to test drive a vehicle may arrive and present a legitimate-looking ID to staff only to disappear with the car with no way of being contacted or found. Others have successfully purchased vehicles with nothing but their sophisticated fake IDs, leaving dealers to foot the bill.
Figures associated with auto ID fraud paint a grim picture:
Delinquent vehicle loan accounts have been on the rise since 2013, hitting nearly 5% in 2019.
Auto theft, in general, has been on a downward trend for 26 years, but 2020 saw a staggering 9% increase.
Stolen vehicles are nearly impossible to recover as they are often dismantled and sold as unidentifiable parts or even shipped off to territories overseas where they can be sold for a premium.
Automotive ID fraud can have devastating results for businesses, but it can also be prevented in large part by relatively simple means. A few key ways that fraudulent activity can be curbed at your dealership include:
Streamlining the loan application process- When purchasers push forward with loan applications, they often enter into a complex process spanning multiple communication channels and touchpoints. This complexity can give fraudsters an in for manipulation and more. ID verification technology makes managing this process much easier and condenses it to only essential touchpoints in the process.
Check applicant history - A fraudulent identity bears a variety of inconsistencies that can be sleuthed out before financing is provided for a new vehicle. By checking each applicant's history for such oddities (multiple accounts opened within a short period of time, changing personal details, etc.), your team can keep many fraudsters from getting their hands on any car in the dealership.
Verifying a customer’s ID is arguably the most effective first step in weeding out fraudsters and preventing their attempts at theft from succeeding. By leveraging Intellicheck's sophisticated ID verification platform, dealership software provider DealerSafeGuardSolutionS, has made it easier for businesses in the auto industry to find fake documents and stolen identities among legitimate ones without suffering losses from successful fraud attempts in the process.
Safeguard Your Dealership
Your auto business's finances and reputation are worth protecting from fraudsters. The only genuine means of verifying your customers are who they say they are is by validating their IDs. So-called "out-of-wallet" questions and background checks cannot completely eradicate the risks posed by scammers with high quality fake or stolen identity information at their disposal. ID verification through Intellicheck's platform can.
As an identity validation provider with experience serving businesses in the automotive industry, we at Intellicheck can offer an ID verification solution that meshes seamlessly with your existing technology. Our partnership with Dealer Safe Guard Solutions has resulted in providing the best in class ID verification that not only protects your business from fraudsters, but also ensures it is compliant with applicable regulations as well.