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Fraud Alert: Dealer Loses $88K to ID Thief

An internet scammer took advantage of a sales manager’s eagerness to move a long-floored unit, costing his dealership a bundle.

February 2018, F&I and Showroom - WebXclusive

by Brian Stout

A FedEx parcel marked “Undeliverable” was the just the beginning of the bad news for a sales manager who sold a new Jeep to an online buyer who turned out to be an identity thief. Photo by Chris Yarzab via Flickr
A FedEx parcel marked “Undeliverable” was the just the beginning of the bad news for a sales manager who sold a new Jeep to an online buyer who turned out to be an identity thief. Photo by Chris Yarzab via Flickr

Our insured is a large automotive dealership located in the Midwest. Like most dealerships today, “Midwest Automotive” owes many of its sales to its solid web presence. So there was nothing unusual about the inquiry the sales manager, “Rick,” received on July 10, 2017.

The customer expressed interest in one of Rick’s highest-dollar units, a 2017 Jeep Grand Cherokee with all the bells and whistles. It had been floored for nearly a year. At $78,000, it had plenty of admirers but few serious interested parties. Moving this unit would make Rick’s day.

A deal was struck and the buyer, “Mike,” was approved for financing by a major lending institution. Rick obtained the necessary information from the buyer, who was said to live two states away, all via email. Mike provided a physical address where Rick could send the bill of sale for a signature. Rick promised to overnight the paperwork via FedEx.

Two weeks later, Rick received the signed bill of sale as well as the financing agreement. Rick immediately sent an acknowledgment email to Mike, thanking him for his purchase and asking him when he would like to pick up his new Jeep — which, by the way, now had an extended warranty for an additional $2,600, GAP insurance for $1,440, and sales tax of $5,773, making the total amount financed $87,813.

Mike thanked Rick for a smooth transaction, then said he had hired a transportation company to pick up the vehicle. “I wish I could be there to take delivery in person,” Mike wrote. “However, I’m unable to leave work for three days to make the trip.” Rick replied, “No problem, Mike, we thank you for your business and will make sure that we get your Jeep detailed and ready.”

When the transport arrived on July 28, Rick had Mike’s Jeep shined up and ready to go. He was happy to have made the deal via email and pleased with the terms.

A little over a week later, Rick received his check from the finance company that bought the deal. He paid off his floorplan lender and sent the title to Mike via FedEx, asking for his notarized signature to make the deal “official,” explaining it would then be filed with the state. He sent the parcel August 9, and a week later, it came back — marked “Undeliverable.”

Rick’s problems are getting ready to get worse. On August 21, he received a chilling call from the finance company. They had contacted Mike — the real Mike. He had denied ever having purchased a Jeep and said his identity had been stolen. They wanted their $87,813 back.

On August 25, Rick and Midwest Automotive filed a claim with their insurance carrier. As you can imagine, this is a very large loss for any dealership, no matter how big or small. It also proves, once again, that dealers must be aware of the dangers that await you on the Digital Frontier.

Brian Stout is a national general adjuster with 18 years’ experience and expertise in dealer open lot claims, inland marine and general liability for commercial insurance carriers.


  1. 1. Jeff [ February 20, 2018 @ 02:32PM ]

    Gap for $1440?? ID theft won't be that dealership's only problem.

  2. 2. Joseph McKinney [ February 20, 2018 @ 02:42PM ]

    They are lucky that Mike didn't receive the title.

  3. 3. Aris [ February 20, 2018 @ 04:29PM ]

    @Jeff......There is one bank that can go up to $1500 gap

  4. 4. Dennis Haggerty [ February 21, 2018 @ 03:06AM ]

    They should have offered them Car Dealer Benefits's ID theft Coverage instead of GAP as a deterrent!

  5. 5. Rickie Jones [ February 21, 2018 @ 03:42AM ]

    sales manager has to be a rookie or plain old dummy

  6. 6. BlazZ [ February 21, 2018 @ 07:42AM ]

    This is what you get when you employ individuals that are not experienced in the industry or intentionally neglect to acknowledge red flags. Anytime you offer financing to an individual in which you are not able to verify their identity in your store you are opening yourself up to identity fraud. As tempting as it is to just ship paperwork and hope for the best because the last 10 times it worked out OK, a dealer cannot operate with that kind of liability. At the very least the dealer should have took efforts to arrange a local notary to verify identity and sign paperwork. When is the last time a mortgage company shipped you closing documents, allowed you to sign and send back. Why is financing and purchasing a vehicle any different. As for the comment regarding gap for $1,440, my captive lenders gap published MSRP is $1,349 for 72 months

  7. 7. WOODY [ February 21, 2018 @ 09:58AM ]

    Hindsight is always 20/20 gentlemen...feel bad for them but let's not forget that the scumbags are everywhere

  8. 8. JJ [ February 21, 2018 @ 11:21AM ]

    We had a similar situation happen to us last night 2/20/18 on the same type of vehicle. We quickly alert the Amityville PD and as a result they apprehended the person running away from our dealership.

  9. 9. TJH [ February 28, 2018 @ 07:47PM ]

    Was claim covered by carrier?

  10. 10. Brian [ March 06, 2018 @ 07:09AM ]

    TJH, yes, coverage was afforded for this loss. However, many policies "exclude" losses due to theft and or false pretense. As a dealer in 2018, I could not imagine executing a new policy without those covered perils. However, I'll note, the dealer would be subjected to any other applicable fees, (deductible) and increased premium at renewal.


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