Page 4 - MIADA-Q4-2022

You Aren’t Doing Enough to Prevent Fraud

Dealers need to implement what’s now considered everyday technology

that can help them spot synthetic identity fraud before it happens.

By Ken Hill

Yes, it’s true, more people are shopping and license to satisfy compliance, procedural to a dealer’s or salesperson’s regular
buying cars and trucks online. Research checklists and to OCR the data to populate workflow. Using a link sent by the
firm Frost & Sullivan forecasts 6 million cars the CRM at the time of loan application or dealer to a customer’s mobile device, the
will be sold online around the world in 2025. even during a test drive. While this process customer is guided through the process of
It’s obviously convenient but there are still is critical, it lacks a significantly critical capturing their document and selfie. Facial
plenty of threats of fraud to be on the lookout element that can potentially prevent or recognition software checks the selfie
for — fraud that can harm both the consumer even thwart the vast amount of synthetic against the image on the driver’s license to
and the dealer/lender. Online car-buying fraud attempts. determine a match. The driver’s license is
scams are widespread today and can take the scanned and run through rigorous data and
form of fake ads, gift card rip-offs, fraudulent Scanning of the driver’s license is important, document recognition checks to determine
wire transfers, title washing, curbstoning, but dealers must also utilize verification its authenticity. The mobile device is
identity theft, synthetic fraud, fake escrows, technology to validate the driver’s license authenticated. Information obtained
payment plans and phony checks. and the person’s true identity. This from the license is run against identity
additional step helps to validate and verify verification tools to find evidence of fraud.
The other truth here is that the individual via address verification, red
fraud also still happens flag, OFAC, synthetic fraud checks and even An Extra Five Minutes Should No
inside the physical dealership. bounce it off the state’s databases to verify Longer Be Considered “Friction”
that it is an active license. It is estimated
According to the experts at that 95% of dealers today still don’t include Dealers might feel this additional step
Point Predictive, they tracked this verification step in their process. creates friction during the transaction or
that inconsistent performance will add
$1.78 billion worth of fraud in And with the proliferation of more digital unnecessary steps to the sales process.
automotive last year. and online shopping, the verification and However, millions upon millions of

validation of one’s identity is even more criti- online transactions in other e-commerce
The company also pointed to a trend cal when a potential fraudster is sitting in the platforms take place each day, and the
where 70% of dealers said customers privacy of their own home filling out a loan average consumer now expects for this
misrepresented themselves or their income; application. Mobile and ID scan technolo- additional layer of security to be a part of
or used fake paystubs during the shopping gies are now widely used in online banking any online transaction — especially one
process. This type of activity doesn’t just applications, and these could significantly that involves the second-largest purchase
happen online, it can also happen at the help dealers during an online transaction. aside from the home mortgage itself.
dealership — and it’s largely avoidable.
Simply scanning a driver’s license isn’t Synthetic identity fraud continues to be
The prevention of synthetic identity enough, and this misstep is costing dealers a growing problem today for dealers and
fraud is not an exact science, and the vast and lenders billions. According to the lender partners across the entire automotive
majority of dealers today believe they are FTC, retail businesses lose billions of spectrum. It is important to have thorough
taking necessary measures to prevent this dollars annually when fraudsters purchase training for all employees to have a higher
type of theft or make statements such as or return goods by using counterfeit level of awareness for the potential of
“my lenders need to worry about synthetic driver’s licenses. Fraudsters have become synthetic identity fraud. It is also important
fraud, I don’t.” However, a closer look at increasingly sophisticated and are able to for dealers to implement what’s now
these procedures leaves many experts in the replicate state driver’s licenses, that are considered everyday technology that is no
industry scratching their heads in disbelief. not embedding state-of-the-art security longer viewed as friction by the consumer.
features implemented by the states. While instincts are important, it’s even
Just Scanning a Driver’s License more critical to have access to the right
Is No Longer Enough The Process Is Easy and Customers tools and sophisticated technology that
Currently, most dealers utilize scanning Will Appreciate It can help dealers and lenders spot synthetic
technology to scan a person’s driver’s The right process is a simple addition identity fraud before it happens. n

4 | MSIADA MISSISSIPPI DEALER Q4 2022