Fraud at the Dealership: How to Spot It, How to Protect Yourself
- Keywords:
- fraud
Today's fraudsters are exceptionally thorough and can use the information they gain to trick companies of all types and sizes, including auto dealerships.
Fraudsters employ all types of methods, and they’re constantly evolving their tactics. Here are the six most common types we have come across.
Employment falsification. This includes instances when the customer does not work at the stated employer or has falsified their occupation, job role, time on the job, etc., to fraudulently obtain financing.
Income falsification. This includes cases in which fraudsters inflate their income information or provide falsified documentation, such as paystubs or notices of assessment.
Dealer misrepresentation. This is a case of internal fraud, in which employment, income, down payment or vehicle value are manipulated to help a customer obtain a car loan.
Identity fraud. In this situation, the thief impersonates someone else to conceal their own identity.
Straw purchaser. This is when a fraudster persuades an individual with good credit to use their name for a car loan on behalf of the fraudster, usually in return for cash, material gain or a cut of the sale proceeds when the vehicle is sold.
Financial elder abuse. The misuse, misappropriation, or exploitation of an older adult’s funds and assets without that person’s knowledge or full consent.
What Can You Do To Protect Your Dealership?
Often fraudsters leave clues that something is amiss. Being aware of certain red flags can help you spot potential fraud before it’s too late, such as the following.
Documentation. Fraudulent paperwork often includes multiple fonts, addresses that appear to have been altered, misspellings and grammatical errors.
Customer identification. Review the identification that has been presented to you. Is it valid? Does the person on the identification look like the person in front of you? Does the birthdate and address match the application? Do the signatures from the identification match the documentation that the customer signed?
Know your client. Verify that the customer is physically present when validating their identity.
Does the customer make sense? If a customer is from out of town, does it make sense that they would visit your dealership for the specific vehicle they’re trying to purchase? Does the life stage of the customer align with their stated income, type of employment or credit report history?
Behavior. Does that customer agree to all the extra vehicle features without asking any questions? Do they seem nervous? Is the customer accepting a high rate for more financing? Do they seem to be in a hurry to drive the vehicle and leave the dealership right away?
What To Do If You Suspect Fraud?
Fraud not only leads to potential financial impacts, it can harm a dealership’s reputation as well. After spotting any red flags, dealers can always:
-
Request additional ID or documentation
-
Verify addresses, phone numbers and employment details from a customer before submitting a loan application
-
Contact the employer by phone
-
Contact your financial institution Representative
Fraudsters are successfully creating new ways to hack systems, obtaining pertinent information. It’s important to stay educated on the different types of dealership fraud, how they occur and the many tools at your disposal that can help prevent them.
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Paul Hunsley
Vice President & Head of Retail Automotive Finance
Today's fraudsters are exceptionally thorough and can use the information they gain to trick companies of all types and sizes, including auto dealerships.
Fraudsters employ all types of methods, and they’re constantly evolving their tactics. Here are the six most common types we have come across.
Employment falsification. This includes instances when the customer does not work at the stated employer or has falsified their occupation, job role, time on the job, etc., to fraudulently obtain financing.
Income falsification. This includes cases in which fraudsters inflate their income information or provide falsified documentation, such as paystubs or notices of assessment.
Dealer misrepresentation. This is a case of internal fraud, in which employment, income, down payment or vehicle value are manipulated to help a customer obtain a car loan.
Identity fraud. In this situation, the thief impersonates someone else to conceal their own identity.
Straw purchaser. This is when a fraudster persuades an individual with good credit to use their name for a car loan on behalf of the fraudster, usually in return for cash, material gain or a cut of the sale proceeds when the vehicle is sold.
Financial elder abuse. The misuse, misappropriation, or exploitation of an older adult’s funds and assets without that person’s knowledge or full consent.
What Can You Do To Protect Your Dealership?
Often fraudsters leave clues that something is amiss. Being aware of certain red flags can help you spot potential fraud before it’s too late, such as the following.
Documentation. Fraudulent paperwork often includes multiple fonts, addresses that appear to have been altered, misspellings and grammatical errors.
Customer identification. Review the identification that has been presented to you. Is it valid? Does the person on the identification look like the person in front of you? Does the birthdate and address match the application? Do the signatures from the identification match the documentation that the customer signed?
Know your client. Verify that the customer is physically present when validating their identity.
Does the customer make sense? If a customer is from out of town, does it make sense that they would visit your dealership for the specific vehicle they’re trying to purchase? Does the life stage of the customer align with their stated income, type of employment or credit report history?
Behavior. Does that customer agree to all the extra vehicle features without asking any questions? Do they seem nervous? Is the customer accepting a high rate for more financing? Do they seem to be in a hurry to drive the vehicle and leave the dealership right away?
What To Do If You Suspect Fraud?
Fraud not only leads to potential financial impacts, it can harm a dealership’s reputation as well. After spotting any red flags, dealers can always:
-
Request additional ID or documentation
-
Verify addresses, phone numbers and employment details from a customer before submitting a loan application
-
Contact the employer by phone
-
Contact your financial institution Representative
Fraudsters are successfully creating new ways to hack systems, obtaining pertinent information. It’s important to stay educated on the different types of dealership fraud, how they occur and the many tools at your disposal that can help prevent them.
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