Survey Shows Dealers Are Susceptible to Fraud

700 Credit, LLC, a provider of credit reports, compliance solutions, soft pull, and identity-verification products, announced results of an industrywide survey that takes the pulse of dealerships and their processes for obtaining copies of driver’s licenses from capture to deal jacket storage. The results revealed significant gaps remain for dealers to follow privacy regulations and the Safeguards Law.

Over more recent years, dealers have gained the capability to utilize new technology to validate both driver’s licenses and a person’s identity. This additional step helps to confirm the individual via address verification, red flag, Office of Foreign Assets Control, synthetic fraud checks, and even compare against a state’s Department of Motor Vehicles database to verify active status.

To get a better sense of the current processes dealers are employing for obtaining driver’s licenses, 700Credit commissioned an online survey and presented it to more than 2,500 dealership executives during March. The survey found, among other things, that:

• Approximately 20% of respondents surveyed admitted they don’t know what process they have in place and that it is usually processed in the finance office, or that they do not know of a process in place at the dealership.
• 14% of dealer respondents said they do not have a process in place because they have always used the same format but couldn’t cite any specifics of the process.
• Another 6% said they don’t have time to make a process.
• 5% said they don’t see the importance of having a process.

Of those who said there is a process in place:

• The majority, or 52%, are making only a photocopy of the license.
• Roughly half said they follow the process less than half the time.
• 19% said they collect a digital copy of the license.
• Only 8.6% collect a digital copy and validate the license.
• A low 0.6% said they collect a digital copy, validate the license, and compare it against DMV records to truly verify the license belongs to an individual.

"We're concerned with the amount of fraud & theft that exists in dealerships today and the lack of processes in place that could help minimize that fraud” said 700Credit Managing Director Ken Hill. “It's alarming to view these results and see the staggering number of dealers who continue to neglect the critical practice of properly validating a consumer’s driver’s license and protecting that sensitive information inside their dealership(s).

"This carelessness not only exposes dealerships to heightened risks of fraud but also puts consumer’s sensitive information in jeopardy. We must collectively prioritize the implementation of robust safeguards to protect both businesses and consumers alike. The number of dealers still making simple photocopies of driver’s licenses is astonishing."

With many dealers still not properly scanning driver’s licenses to verify shopper’s identifications, it is not surprising to also see that a third of respondents say they believe their dealerships see five to 15 fraud attempts made on vehicles every month.

Originally posted on Auto Dealer Today