Don’t Hand the Car Keys to a Fraudster
The fraudulent purchase of vehicles has become a serious problem for car dealerships. The risk is much bigger than you’d imagine — in fact, a recent study found that 84% of dealerships have dealt with an increase in identity fraud since the beginning of the pandemic. Another 79% experienced identity fraud-related vehicle loss between October 2021 and October 2022 alone.
How it all transpires will vary from one dealer to the next, but there are two areas most prone to fraud: the test drive and the time of purchase.
With a test drive, people can drive off and never come back. Sure, dealers often ask consumers for their driver’s licenses before handing over the keys, but this doesn’t fix the flaw in the system. A photocopy of a fake ID is just a copy of a fake ID. If you fail to recognize you’re holding a fake license in time, you likely won’t see the car or the fraudster again.
However, just because the vehicle isn’t stolen during the test drive doesn’t mean your dealership is safe from theft at that point in the transaction. Because most cars are big-ticket items and involve a loan or lease, Know Your Customer (known as KYC) regulations are part of the process. KYC involves understanding who you are working with to minimize the risk in the transaction. Checking a government-issued ID is a common part of that process.
Why It’s Hard to Spot a Fake
There are so many types of licenses, making it challenging to learn how to tell if a driver’s license is fake. Between the different security features that vary from state to state and the quality of today’s fakes, it is nearly impossible to catch a fake with a visual inspection alone.
Complicating matters further is the move to online car shopping. Consumers can buy everything else online, so why not vehicles? There are many sites (dealers included) that allow consumers to conduct the entire purchase process digitally. If a fraudster uses a stolen ID that’s not yet been reported, everything will appear on the up and up.
More Than Just Inventory Shrinkage
Though this should go without saying, more stringent fraud detection protocols have become a necessity. They’re an essential way of avoiding shrinkage and profit erosion for auto dealers. This isn’t important only when the issue is whether a car will come back to the lot, either. If a dealership loses a vehicle, the next step is usually an insurance claim.
Because dealerships have only so many claims available per year, their deductibles will go up once they hit their thresholds. Other expenses may also experience hikes. If a dealership is deemed too high of a risk, it could find itself in a situation where it no longer qualifies for insurance. When the cost of covering a car dealership’s inventory becomes too much for insurance providers, the future of the business is put at serious risk.
Dealerships can better protect themselves by using Intellicheck. We can tell whether every license you scan is real or fake with no friction or downtime. We can do this for all government-issued IDs from each state, region, and province. This means you won’t have awkward conversations because we mistook a genuine license for a fake one. It also means that fraudsters won’t get through.
We stopped an estimated $276,548,000 in fraudulent sales in 2022
To get an idea of Intellicheck’s effectiveness, we stopped an estimated $276,548,000 in fraudulent sales in 2022. If the average insurance deductible is approximately $5,000, this means we stopped an estimated $29,420,000 in deductible losses for dealers. In 2023, as of May 31, we have already stopped an estimated $182,830,000 in fraudulent sales and an estimated $19,450,000 in deductible losses. Added together, that’s over half a billion dollars saved in less than two years!
The speed of our technology is unmatched. Because we scan the barcode, you can know whether an ID is real or fake in under a second — no need to photograph the back and front of a license and upload. Intellicheck also runs standalone or can be integrated with your dealer systems.
If you’d like additional information about our solutions, please let us know. We’d be happy to discuss your needs and find a solution suited to your dealership.
