Page 14 - GIADA july2020

Slippery Synthetic

Fraud Increasingly

Occurring in

Dealerships

By Ken Hill, Managing Director of 700Credit

As COVID-19 has lead to more This crime is a different type of identity have built/created credit files that are in line
vehicles being financed and fraud: It is not perpetrated by run-of-the- with the identity they are presenting at the
purchased online, the ability mill cheaters who attempt to purchase a car point of sale. To isolate synthetic fraud,
with someone else’s identity and have no you must use detection technology that
of the F&I department to sift intention of ever making a payment. goes deep into the “buyer’s” credit history
out synthetic fraud will be to identify unusual credit behaviors and
increasingly valuable to them. Instead, these fraudsters present an identity relationships – for instance, who else is
F&I managers are encouraged that they have created with an established listed on the credit history that might
credit file. They are patient, as well; they foretell of manipulation.
to take another look at available have spent more than a year building these
technologies to identify synthetic files and establishing credit only to wait Synthetic fraud protection compliance
fraud when practiced against for the “bust out” date. The problem is, software, for instance, detects such
their dealership. the social security number, employment identity fabrications and alerts F&I.
history, address, and other forms of I.D. Thus notified, the manager should ask
The harsh reality of the crime known as presented isn’t theirs – it’s a homogenization the buyer for more clarification or proof
“synthetic identity fraud” threatening auto of yours, mine, and your granddaughter’s. of identity before proceeding with the
dealerships, is how damaging it can be if transaction.
these fraudsters are successful without CyLab, Carnegie Mellon University's
detection. Synthetic fraud in 2019 was security and privacy research institute, To send the suspect buyer packing, ask
costly to dealers and their lenders – $69 reports stolen children’s SSNs are used for them tough identification questions, or
million. The evidence we see, which is synthetic frauds 51 times the rate of adults ask them to sign documents that will
supported by Experian and others, is because of the “unique value of unused allow the dealership to have the SSN they
that incidents of synthetic fraud are on Social Security numbers.” present verified by the Social Security
the upswing. And now, more than ever, Administration.
with COVID-19 forcing dealerships to Unless your dealership is using synthetic
move their operations online, we can only fraud detection technology, it’s unlikely Yes, this questioning could offend some
expect this illegal practice to become even that even the most diligent finance director legitimate buyers, but dealers agree that
more of a threat. will catch on when the dealership is being risk is manageable given the value of the
defrauded this way. asset in consideration.
F&I departments are encouraged
to take another look at available Then, with the deal done, the new “owner” As more vehicles are financed and purchased
drives off having no intention of paying the
technologies to identify synthetic loan – and laughing on their way, knowing online through digital dealerships during
the COVID-19 era, dealerships’ ability to
fraud when practiced against he or she has left behind no tracks. sift out synthetic crime from these channels
their dealership. will be increasingly valuable to them, their
Stop the Fraud lenders, and their mutual, honest customers.
My advice is, take heed against this risk. F&I departments are encouraged to take
Learn how to protect (and remedy) your Some dealers mistakenly believe that the another look at available technologies to
dealership from this hard-to-detect crime. Red Flag identification methods detect identify synthetic fraud when practiced
synthetic fraud; it does not. These fraudsters against their dealership. n

12 | GIADA Independent Auto Dealer JUL/AUG 2020