Most of this article is based on information from a webinar put on by our Partner, National Bank, back in June.

Auto financing fraud is a growing concern, with fraud rates climbing and the tactics of con artists becoming increasingly sophisticated. The rise in fraud is not limited to the auto industry; it’s a trend that’s been observed across various sectors, including credit cards, deposit accounts, and telecommunications.

Higher fraud rates for auto financing have been noted in Western Canada, specifically in Vancouver and Calgary, as well as in Southern Ontario. The used car market specifically is experiencing higher rates of financial fraud, with some institutions reporting fraud rates of just over 1%.

Millennials, being credit active and more engaged online, are particularly vulnerable to fraud. Their high volume of credit activity and the sharing of personal information online make them prime targets.

To reduce the risk of fraud during vehicle sales, it is worthwhile for dealers to consider the following suggestions:

• Be consistent with your process.
• Verify the buyer’s identity using their driver’s license along with at least one other form of valid identification (preferably more).
• Confirm that the id is valid, not expired.
• Match the photo on the id to the individual.
• Driver’s license should sound like metal when it’s dropped on a desk.
• Train staff on how to carefully examine id ensuring it hasn’t been altered.
• Watch for multiple fonts (Fraudulent identity will often have multiple)
• Verify employment income by contacting the employers directly.
• Approach transactions with new and out of town customers who demand immediate delivery with a heightened level of caution.

The battle against financing fraud requires awareness from both dealers and lending institutions. By understanding the trends, recognizing the red flags, and taking proactive steps for prevention, dealers can decrease the risks.