August 5, 2021

Fighting fraud proves harder in COVID era

With masks required and online sales transactions becoming more common, dealerships are prioritizing fraud prevention during the COVID-19 era.

Lori Church, director of compliance at Holman Automotive Group, told Automotive News that the dealership group — which has 42 stores in nine states — is using a “commonsense approach.”

That includes confirming addresses through map tools and asking the customer specific questions, such as, “What are the crossroads of their address?” and “Where is your nearest grocery store?”

“The last thing we want to do is hand over a set of keys to a car and not know who we are handing them to,” Church said.

DCH Kay Honda in Eatontown, N.J., pays close attention when auto lenders ask for stipulations or additional documents to finish the loan, General Manager Ruben Arcila said.

Finance managers obtain clear copies of driver’s licenses, front and back, that are secured in person — even for digital retail transactions. The store also works to get color copies of customer Social Security cards.Arcila said lenders are asking for more documents “not because they’re assuming fraud, but there’s more of a chance where people are buying a car, deferring payments for three months and they didn’t end up getting another job.”

Before the coronavirus pandemic, dealership finance and insurance departments sometimes took extra steps to verify a customer’s identity. Now, those extra steps have become routine.

Church said that red flags can surface on phone calls when the customer has to quickly hang up before answering a question. Another way to detect fraud is by closely comparing signatures on several documents.

“When bad guys generate fake documents, the same person isn’t doing the signing,” she said.

Mike Power of Jim Ellis Automotive Group had his own list of precautions, including closely scrutinizing documents when the customer is paying cash and watching for several inquiries in the last 30 days.

The auto group, northeast of Atlanta, has implemented the use of several resources to verify identity and create a secure digital-signing environment.

All of the Jim Ellis salespeople are trained to use the Intellicheck app, which verifies identification by scanning the bar code on an ID and instantly flags any discrepancies.

“Since January, 20 people have not been sold a vehicle just because of Intellicheck,” Power said.

They also use out-of-wallet questions at the dealership to verify identity upon delivery of a vehicle and for all virtual transactions to ensure security.

“Is virtual a huge part of our business right now? No,” Power said. “But we’re seeing more and more people do more stuff digitally. So as we move forward, we are ahead at Jim Ellis.”

Art Wheaton, automotive expert at Cornell University, said it is crucial for dealerships to confirm proof of employment and address in case the customer defaults on their car payment.

Wheaton: Extra precautions Increased unemployment and working from home during the pandemic make it more difficult to physically track people down, Wheaton said.

“I don’t think the impersonation is the issue as much as making sure you have adequate information to track that car down again if they can’t pay for it,” he said.

Wheaton said that during times of economic stress, such as the COVID-19 era, people become desperate. That’s why there are more dealership break-ins, fraudulent activity and dishonesty during vehicle purchases right now.

“I see absolutely nothing wrong with dealerships taking extra precautions to make sure they are not being cheated out of their money,” he said.