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ID Fraud is on the Rise. How Can You Protect Your Dealership?

Friday, April 28, 2023 9:00 AM | Anonymous member (Administrator)

Search Google and you’ll find story after story of criminals trying and often succeeding in stealing vehicles from dealerships by using a fake ID and pretending to be someone else. In the last year according to an eLend study, 79% of dealers had an identity fraud-related loss and 60% lost at least three vehicles due to identity fraud.

“I would say just before the pandemic, it (identity fraud) started to explode, and it continues to be a bigger and bigger challenge for dealers,” said Doug Fusco, founder of Informativ’s Dealer Safeguard Solutions. “I think fraudsters are getting better and they’re getting smarter. The IDs they’re generating are very authentic looking and they’re also not coming in on a Monday morning, they’re coming in when the dealerships are at their busiest hoping that they can get through the hoops and the distractions and not get caught.”

Add to that fraudsters have unlimited time to work on this and when they win, they win big. All that has made preventing fraud a big challenge for dealerships. But beyond implementing tech to identify and prevent fraud, there are things dealers can look for to avoid getting ripped off.

Money is no object: If the car buyer isn’t putting any money down, doesn’t care what the payments or terms are, you may want to take a closer look at that customer. “If it’s ‘yes, yes, yes, check the box and just get me through the process’, that’s the first thing we see pretty consistently,” said Fusco. “They’re not putting any money down. They don’t care what the payments are, they don’t care what the terms are.”

“Yes” to everything on the menu: This goes together with “money is no object”. Besides not even trying to negotiate the price, the fraudsters also say yes to every “add–on” you offer – – on the sales floor and in F&I. They’re saying “yes” because they have no intention of paying for it. The salesperson may be thrilled by a fast, high gross deal, but you could be paying for it.

Remote delivery: Covid prompted dealerships to offer this great service and benefit. Fraudsters are taking advantage of it. Especially be aware if the delivery location is an office building or retail location, like a Starbucks. How can you verify that the address on the driver’s license is the buyer’s residence?

“They say ‘Hey, I want to meet at my work, my office. I’ll meet you in front of the building’, or they choose a Walmart or somewhere,” says Fusco. “That’s strange, right? But because it’s always a healthy financial deal, sometimes that gets overlooked.”

Once the vehicle is stolen, dealers have to do a lot of work to get it back–and may never get it back.

Sometimes vehicle tracking systems like Onstar can pinpoint the location–but that’s only if the theft is detected very soon after the vehicle is stolen and before it’s been shipped overseas or dismantled in a chop shop.

While the naked eye may be able to detect fake IDs, criminals are getting more sophisticated, so technology needs to keep up, and employees need to use the technology.

“There are clearly lots of different tools to identify fraud and lots of different ways to identify fake driver’s licenses,” said Fusco. “For the tools to be successfully used and stick in the showroom just about like everything else that salespeople want, it has to be simple. It’s got to be fast, and it has to be accurate. If it doesn’t do those three things, they’re going to use it when they feel like it. So, the consistency is the main part of that.”

The challenge at many large dealerships is that they may have one device to scan a driver’s license that all salespeople have to use and when a salesperson has a buyer impatiently waiting for a test drive, the step of verifying an ID can easily be skipped increasing exponentially a dealership’s risk.

The tech also must work both in-store and remotely because since the pandemic many more customers are doing transactions remotely and dealers still need a way to verify their driver’s license.

“Unfortunately, we see driver’s licenses being texted to cell phones, sent to Gmail accounts and those are compliance violations that are directly against a dealership’s privacy statement,” said Fusco. “We built a tool that’s simple, it’s fast, it’s accurate, and it works on in–store and remote sales.”

The tech also protects other rooftops in a dealership group. If a driver’s license is scanned in one store an alert is immediately sent to other dealerships in the group. “Talk about broadcasting it out! We’re going to let everybody in our family know that’s within a close geographic proximity that we just had a fraudster walk into our showroom,” said Fusco.

In another case, over a six–month period, a large Texas dealership used the ID fraud technology to detect 19 fake IDs, protecting the dealership from $1.2 million dollars in losses from stolen vehicles.

“We have a tool that validates the driver’s license,” said Fusco. “We go a step further though and also have a synthetic fraud platform that comes along with their credit report that we’ll look at identities that have been created by taking one person’s social, another person’s address, another person’s piece of information and over a period of time sewing together and creating a false identity with information on the front end.”

Click here to learn more about our fraud detection and prevention.

Chicago Automobile Trade Association
18W200 Butterfield Rd.
Oakbrook Terrace, IL 60181 
(630) 495-2282


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