By continuing to use our site, you consent to the processing of cookies, user data (location information, type and version of the OS, the type and version of the browser, the type of device and the resolution of its screen, the source of where the user came from, from which site or for what advertisement, language OS and Browser, which pages are opened and to which buttons the user presses, ip-address) for the purpose of site functioning, retargeting and statistical surveys and reviews. If you do not want your data to be processed, please leave the site.


4 Frequently Forged Identity Documents In Car Sales

Automotive fraud

Fraud in the automotive industry can cost dealerships hundreds of thousands of dollars. Unfortunately for these dealerships, automotive lenders are now trying to make the dealerships shoulder the responsibility for fraud related losses, which leaves dealerships to absorb the detrimental costs. 

In many automotive fraud cases, fraudsters will submit fraudulent documents that help them receive a higher credit limit at a lower interest rate. They may also plan to steal a vehicle without any intent to make payments at all. In these instances, fraudsters may pose as a strong applicant with a solid credit history with their sole goal being to drive the vehicle off the lot. Once the vehicle has left the dealership then the likelihood of recovering the losses is far lower. 

Some of the most commonly forged documents dealerships need to watch out for include fake IDs, true name fraud, misrepresented income, and stacked loans. Getting to know these forms of fraud can help prevent them and save the dealership money.

Fake IDs

One of the most common forms of fraud in the automotive sector occurs when fraudsters use fake IDs to apply for car loans. Synthetic identity fraud is one of the fastest growing types of fraud with dealerships and is incredibly difficult to catch and prevent. 

In synthetic identity cases, fraudsters combine real information with fake information to create a unique identity that does not actually exist. They may use a children’s social security numbers along with a fake name, which allows fraud to go undetected for years until that child is applying for their first credit card. 

Fraudsters will rely on fake IDs to finalize financing, rentals, and leasing agreements with no intent to ever repay what they have borrowed. 

True Name

Another very common form of fraud in the automotive industry is true name fraud. True name fraud is an instance in which a fraudster will apply for a loan using somebody else's real information, including the SSN, name, address, date of birth and other information included on your personal identification documents. 

True name fraud commonly occurs between close friends or family who can easily fill out the "Know Your Customer" information to bypass initial security measures. When this kind of fraud happens and it is someone you know then it is also considered "Familiar Fraud". 

According to the Javelin Research and Strategy's Identity Fraud Report, about 847,000 of true name/familiar fraud victims actually knew their thief. True name fraud is a major risk for automotive dealers and can be tricky to catch if the buyer has a decently made fake ID. In fact, many fake ID producers advertise their products by claiming their IDs are scannable and able to pass any security tests allowing fraudsters to shop and carry out day to day activities without triggering any red flags. 

Income

It’s not uncommon to see fraudsters misrepresent their income by inflating how much they actually make to qualify for an automotive loan. They may also claim a second income or even lie about their actual employer to disguise their income. Without a proper process for verifying this information

In an attempt to dismiss suspicion of false activity, buyers may provide fake bank statements or pay stubs to falsify their bank balances or deposits on their loan applications. 

Stack Loans

Loan stacking occurs when a buyer applies for multiple car loans before the bureau has a chance to update their credit history. Fraudsters do not use loans to refinance other loans but instead take out multiple loans at once. 

The objective is to get as many auto loans as possible before they are detected, also known as a "bust out". This can result in a negative cycle of debt and make it hard for dealerships to pay back each loan. Being able to catch this type of fraud could save dealerships a lot of money.

Protect Your Dealership with Intellicheck

In many of these instances of forged identity documents in car sales, fraudsters will use a false identity or represent false information to present like a more legitimate candidate. Backing your dealership’s internal fraud controls with an ID authentication solution will dramatically help you improve your bottom line and reduce instances of fraud.

Intellicheck provides great solutions for in-person and online transactions to prevent fraud. Intellicheck is incredibly easy to use and integrate into any dealership's systems. It will save a lot of time and money by catching and preventing fraud before it happens. Not to mention, it will save you from all the headaches from dealing with the aftermath of fraud.

Related posts

  • May 18, 2020, 12:00 AM

    Fraudsters have been using money laundering schemes to cover illegal activities for decades. In an effort to cut back the number of people taking advantage of the system, the government has imposed a set of rules and regulations called AML compliance. Anti-Money Laundering Act (AML) first appeared in the U.S. to stop perpetrators from moving money to evade taxes and use it for notorious purposes. 

  • Sep 17, 2020, 12:00 AM

    As somebody who works for a financial institution, AML compliance needs to be one of your top priorities. One of the main AML compliance regulations states that every financial service company must perform identity verification. This is why it’s especially important to make sure that your customers really are who they say they are, also known as customer due diligence (CDD).

    That said, it’s crucial that you closely follow a CDD checklist to avoid fines, criminal negligence, or even a company shut down. Making sure your business is fully compliant with AML regulations is key to protecting both your company and your customers. 

    This checklist will help to ensure your customer due diligence is completely taken care of:

  • Jun 4, 2020, 12:00 AM

    One of the biggest concerns for business owners and financial institutions across the country is protecting their business from fraudulent activity. While it may make sense to cut corners to save money, fraud prevention tactics can save you from millions of dollars in losses, especially ID related fraud cases.

  • Aug 26, 2020, 12:00 AM

    In the fight against money laundering, the Financial Crime Enforcement Network established the Bank Secrecy Act (BSA) of 1970 and several laws thereafter. Anti-Money Laundering (AML) training programs have since been created to ensure that companies understand and conform to these AML compliance laws and regulations. 

    These programs were originally built on four core pillars: the development of internal policies, procedures and controls, the designation of an AML program officer, relevant training of employees and independent training. A fifth pillar, due diligence, was added in 2018. 

    AML training programs are now one of the necessary steps toward securing AML compliance. Here are a few things to keep in mind during the training process:

  • Jul 24, 2020, 12:00 AM

    Fraudulent activity is an issue that affects almost every business worldwide. From major retailers facing in-store and online credit card fraud to banks and financial institutions who deal with fraud on a daily basis, it’s a very common issue that many companies have tried to combat. 

  • Sep 10, 2020, 12:00 AM

    Chargeback fees can cause serious financial damage and also threaten your business’s reputation. Chargebacks do not only refer to returned merchandise or lost sales; the true cost of chargebacks lie in fees that are tied to them.

    Typical chargeback fees range from $20 to $100. Add in the customer acquisition and operation costs (stocking, storing, packing, and shipping) and your business ends up losing almost three times the transaction amount.

    Therefore, it is crucial for you, as a merchant, to take preventive measures to reduce the instances of chargebacks fees. Here’s how you can stay ahead:

  • Sep 23, 2020, 12:00 AM

    Retailers are consistently vulnerable to fraud and theft which can be crippling for establishments of all sizes. Chargeback fraud contributes greatly to the losses businesses incur over the course of their lifetime and are rapidly becoming more problematic. In fact, according to a study by LexisNexis, overall retail frauds have tripled since 2017. 

    The rise in online shopping trends has also ushered in new sets of malicious threats for retailers. That said, the key to staying ahead of chargeback lies in an extensive understanding of why they occur and how you can prevent them. Here’s what you need to know:

  • Aug 28, 2020, 12:00 AM

    A lot of businesses have questions about credit card chargeback merchant rights. To answer that, you must first understand what a chargeback is and how it works.

    In simple terms, a chargeback is a reversal of any credit card payment initiated by the bank that issued the card. This is often used when a buyer feels that the product description is deceitful or they suspect identity fraud, they will contact their bank directly to enforce a chargeback.

    A chargeback is a safety net designed for cardholder’s security. Therefore, you should understand credit card chargeback merchant rights to ensure you protect your business from chargeback frauds whenever possible.

  • Dec 2, 2020, 12:00 AM

    With the demand for automotive sales moving from in-person to online, the need for fraud prevention methods is also increasing. In fact, according to a recent study by GIACT, 85% of car shoppers are more likely to buy from particular dealerships that will allow them to start or complete nearly all of their vehicle purchases online.

    Due to this massive shift to online purchasing, a wide range of opportunities have opened up for fraudsters to steal from automotive dealers.  Fraud in the automotive industry can be as easy as a few credit card scams.