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FEATURE

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, Managing Director for 700Credit

Yes, it’s true: more people are shopping checklists and to OCR the data to populate dealer’s or salesperson’s regular workflow.
and buying cars and trucks online. the CRM at the time of loan application Using a link sent by the dealer to a
Research firm Frost & Sullivan forecasts 6 or even during a test drive. While this customer’s mobile device, the customer is
million cars will be sold online around the process is critical, it lacks a significantly guided through the process of capturing
world in 2025. It’s obviously convenient critical element that can potentially their document and selfie. Facial
but there are still plenty of threats of prevent or even thwart the vast amount of recognition software checks the selfie
fraud to be on the lookout for — fraud synthetic fraud attempts. against the image on the driver’s license
that can harm both the consumer and to determine a match. The driver’s license
the dealer/lender. Online car-buying Scanning of the driver’s license is is scanned and run through rigorous
scams are widespread today and can take important, but dealers must also utilize data and document recognition checks
the form of fake ads, gift card rip-offs, verification technology to validate the to determine its authenticity. The mobile
fraudulent wire transfers, title washing, driver’s license and the person’s true device is authenticated. Information
curbstoning, identity theft, synthetic identity. This additional step helps to obtained from the license is run against
fraud, fake escrows, payment plans and validate and verify the individual via identity verification tools to find evidence
phony checks. address verification, red flag, OFAC, of fraud.
synthetic fraud checks and even bounce it
The other truth here is that fraud also still off the state’s databases to verify that it is An Extra Five Minutes Should No
happens inside the physical dealership. an active license. It is estimated that 95% Longer Be Considered “Friction”
According to the experts at Point of dealers today still don’t include this Dealers might feel this additional step
Predictive, they tracked $1.78 billion verification step in their process. creates friction during the transaction or
worth of fraud in automotive last year. that inconsistent performance will add
And with the proliferation of more digital unnecessary steps to the sales process.
The company also pointed to a trend and online shopping, the verification and However, millions upon millions of
where 70% of dealers said customers validation of one’s identity is even more online transactions in other e-commerce
misrepresented themselves or their critical when a potential fraudster is platforms take place each day, and the
income; or used fake paystubs during the sitting in the privacy of their own home average consumer now expects for this
shopping process. This type of activity filling out a loan application. Mobile and additional layer of security to be a part of
doesn’t just happen online, it can also ID scan technologies are now widely used any online transaction — especially one
happen at the dealership — and it’s largely in online banking applications, and these that involves the second-largest purchase
avoidable. could significantly help dealers during an aside from the home mortgage itself.
online transaction.
The prevention of synthetic identity Synthetic identity fraud continues to
fraud is not an exact science, and the vast Simply scanning a driver’s license isn’t be a growing problem today for dealers
majority of dealers today believe they are enough, and this misstep is costing and lender partners across the entire
taking necessary measures to prevent this dealers and lenders billions. According to automotive spectrum. It is important to
type of theft or make statements such as the FTC, retail businesses lose billions of have thorough training for all employees
“my lenders need to worry about synthetic dollars annually when fraudsters purchase to have a higher level of awareness for the
fraud, I don’t.” However, a closer look at or return goods by using counterfeit potential of synthetic identity fraud. It is
these procedures leaves many experts in driver’s licenses. Fraudsters have become also important for dealers to implement
the industry scratching their heads in increasingly sophisticated and are able to what’s now considered everyday
disbelief. replicate state driver’s licenses, that are technology that is no longer viewed as
not embedding state-of-the-art security friction by the consumer. While instincts
Just Scanning a Driver’s License features implemented by the states. are important, it’s even more critical
Is No Longer Enough to have access to the right tools and
Currently, most dealers utilize scanning The Process Is Easy & Customers sophisticated technology that can help
technology to scan a person’s driver’s Will Appreciate It dealers and lenders spot synthetic identity
license to satisfy compliance, procedural The right process is a simple addition to a fraud before it happens. n

2 | MSIADA MISSISSIPPI DEALER Q1 2023