Pitcher and Doyle have released a notice to warn auto retailers about the “dramatic increase” in the number of fraudulent deals stemming from dealerships.
“Fraudsters are getting more sophisticated and are taking advantage during these difficult times as sales teams are looking to make every deal,” said the company in its warning notice. “Most of the claims involve an individual who quite easily meets the requirements for pre or conditional approval through the financing institution.”
The company said there is often an “urgent” deadline to get the vehicle across the curb. But when the financial institution completes their audit, it is revealed the information provided to them in the file was either stolen or falsified.
“At that point, the vehicle and the customer are gone and the financing institution refuses to fund the deal,” said Pitcher and Doyle, adding that “Often the dealer ends up bearing the loss.”
They say the only real failsafe is to wait until the deal has been irrevocably funded by the financial institution. However, given the circumstances the company has also provided some best practice suggestions for auto retailers to consider:
If a deal seems too good to be true — it probably is. Also, is there a sense of urgency in the transaction? For example, does it need to be completed by the end of the day, the week, or on the last day before a long weekend?
How did the customer arrive at the dealership? In many of these fraud situations, the “customers” arrive by Uber or are dropped off. It may be worth asking.
The company also said dealers should always tour the “customer” in such a way that they are captured by video surveillance. This is because a professional fraudster will shy away from cameras, which may serve as a red flag for dealership employees.
Dealers should also review and copy three pieces of identification, and then closely examine them for discrepancies. Don’t be afraid to ask questions.
Pitcher and Doyle also advises not refunding a deposit prior to receiving irrevocable funding, because this type of request is a clear red flag. And they suggest verifying insurance coverage directly with the insurance company, because “Fraudsters are good at producing ‘official looking’ letters and pink slips.”
Dealers should also consider escalating the deal upwards to management at thefirst sign of concern. The more eyes on the deal, the better. Don’t be afraid to ask the customer to wait the 24-48 hours for final approval. If the “customer” refuses, review all the details again.
Finally, conducting regular crime and fraud prevention training with your employees can go a long way in helping the dealership avoid these issues.
