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Tips to help spot identity and income verification fraud

Being ready to identify fraud from the beginning of a customer interaction helps protect your store and maintain relationships with lenders.

With the gloomy economic forecasts that are flooding every media outlet daily, criminals are finding an easier environment to be able to pull off different types of fraud in dealerships nationwide. 

Fake identification, fake income. And it costs dealers and lenders alike.

This year’s Point Predictive Survey of auto lenders revealed that not only are 70% of respondents expecting a recession later this year but that fake IDs and falsified income are their biggest worries. 

It’s such a big problem that about 10% of lenders said they have stopped working with up to 50 or more dealers due to fraudulent loans being submitted.

Both can be costly both for your store and for your customer. F&I is often at the center of both types of fraud and it’s important to understand how to safeguard your process internally so you can both spot fake ID scams and proactively learn to spot fraudulent income information. 

How to spot fake ID scams

Criminals are getting better at being able to create fraudulent state driver’s licenses and often use stolen Social Security numbers or other falsified personal info to secure quick approvals. 

Here are some red flags to watch for that may mean your customer is not who they say they are:

  • Never a down payment – Often the thieves will put together a 100% finance deal. After all, they have no intention of paying it back anyway so why bother putting any real money down?
  • Saturday purchases only – Running this kind of scam means coming in when things are so busy that you hope no one notices anything is wrong with the ID. These fraudsters understand how the dealership environment works and they know that busy days are ones where a store is more likely to push the deal through faster to be able to deliver as many cars as possible. Spot deals almost always happen on Saturday and those are the ones most at risk.
  • Delivery in unusual places – If your customer asks for the delivery to take place at a nondescript office complex at 8pm on a Tuesday, this could be a problem. Or if they want to meet in front of the local Walmart, be wary.

Scammers will try to take delivery somewhere other than the dealership lot. It may seem strange but, in many cases, this is what tipped off local authorities.   

  • Take ALL F&I products offered – Make sense when you think about it. If the scammer knows they have no intention to pay for this car, why not say yes to ALL the F&I products? They don’t care but ultimately, they want to get out of the F&I office as fast as they can. 

What ‘fake income’ looks like…

This could be easier to spot when presented with income documentation either as a stip for approval or if your F&I staff is looking at information written on a credit application. 

  • Perfectly rounded numbers – Sure, some may round up a little when talking about their income but it’s rare that it’s $70,000.00 on an actual W2 or pay stub. It’s too easy to present it that way. 
  • Documents that look unprofessional – If the presented W2 or paystub LOOKS sketchy, it probably is. Misspellings, employer ID numbers that look too long or too short, and no tax info (if a paystub) are red flags. 
  • O’s and 0’s used incorrectly – Amateur criminals easily get tripped up on this and it should be easy for your staff to spot as well.  
  • Non-US Based Company – How convenient that the company is based overseas. Fraudsters will assume that no one will verify with a company in another country but unless it’s a well-known entity and the applicant gives you the information about how to find them, think twice.  
  • Paystubs and/or Credit App Info Inconsistent – Dates all over the place, income variance from one job to the next being TOO great ($15 per hour one job and then the current job paying $125k…sure.) 

Being ready to identify fraud from the beginning helps maintain a solid relationship with your lenders and keeps your dealership out of the minds of criminals who look for dealerships that aren’t as proactive in catching these types of scams.

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Kristine Cain
Kristine Cain
Kristine Cain is a contributing writer for CBT News. She has over 26 years of experience in the automotive industry specializing in F&I and B2B sales.

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