Common Dealership Fraud - How to Prevent Identity Theft and Spot Fake ID Scams

Fraud can occur on both sides of the F&I desk. 

Your buyer's identity can be stolen from mishandling of documents during the course of a deal.  Dealerships can also fall victim to one of the most common forms of fraud, fake identification scams. 

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 be proactive when it comes to ensuring your staff unintentionally puts a customer's information at risk.

How to Spot Fake ID Scams

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

Many of these vehicles end up being shipped overseas or sold to unsuspecting buyers in the wholesale market.

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

  • No Money Down - 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?

  • Always Buying on Saturdays - 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.

  • Odd Place to Take Delivery - 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 Wal-Mart, 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. 

  • They Say Yes to Everything - 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. The longer the deal takes, the more likely they may be found out. Yes to everything in a rapid fire fashion = HUGE red flag.

Preventing Identity Theft at Your Dealership

Thousands of people every year have their identity stolen in the process of major purchases like buying a car. It’s even easier now with so many purchases being started online due to the pandemic. 

But for the dealerships doing the majority of their deals in person, is there more you could be doing to prevent identity fraud at your dealership? 

First, let’s take a quick look at 4 easy steps to prevent customers from falling victim to identity fraud during their purchase- 


1) Keep any paper documents safe– Be sure to limit access to the F&I office for example…make it clear who is allowed in the office and who is not. Outside of management, no one should be in the office alone with access to deal folders that have personal information like credit applications and copies of ID’s. 

Watch for anyone other than authorized personnel walking off with the deal jacket. It should never leave the floor, the sales tower, or the F&I office. 


2) Safe Storage – Many dealerships have gone completely digital when doing F&I paperwork and of course that brings its own set of security requirements in an online environment. For those that are still executing any paperwork as part of an F&I deal, it’s important not to forget that how you store the personal information can also be important. 

If you are doing any deals with a physical, paper component, keep them  under lock & key after funding and after any internal audits are complete. Locked file cabinets and vigilance amongst the staff can be the best safety net.


3) Dust off that shredder-  If you don’t have one now, invest in a large office shredder. It will be your best weapon against people that ‘dumpster dive’ looking for personal information in the trash. 

Shred everything to be safe, both after the shopper leaves and in accordance with whatever your internal policy is on aged deals. As more dealerships shift to a cloud-based or online environment to work deals, remember that all those old paper deals must be disposed of properly after they are no longer needed for compliance purposes.


4) Be picky about your staff – Who you hire matters. There are cases where identity thieves have intentionally hired themselves into dealerships to be able to access consumers personal and financial information. If your dealership is not already conducting background checks before hiring, start today. 

TruIdentity, powered by TruWarranty, is a valuable service to offer every customer that comes through your store. Dealerships often offer this as a preloaded bundle whether the customer finances or pays cash. It’s about doing everything you can as the trusted dealer doing your part to help protect them against one of the most destructive forms of fraud in the consumer marketplace. 

Take a peek here for all the details on how we can set up your store to offer this powerful protection to every customer today.

date published
March 17, 2023

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