Dealerships are being held more accountable for verifying customers’ identities and financial information, due to changes in dealership agreements with lenders.

If a buyer defaults on a finance contract, it is becoming more common for lenders to require dealerships to repurchase the contract, take back the vehicle and pay off the loan, reported Automotive News.

The rising incidence of identity theft and stiffer anti-terrorism regulation has contributed to the changes. Media reports of dealerships falsifying information on credit applications have left banks and finance companies wary.

"From a casual reading of the terms, it would seem that a dealer is on the hook only under limited circumstances," said dealership attorney Leonard Bellavia of Mineola, N.Y., to Automotive News. "The reality is just about every default scenario can be strained and twisted to fit within the repurchase provisions."

Lenders’ attorneys suggest dealers and their lawyers are overstating the problem. If lenders enforce their agreements too strictly, the attorneys say, they risk losing dealership business.

"Banks and finance companies know that if they stick it to dealers on technical, small problems, that dealership will look for someone else to buy" its finance contracts, said Thomas Hudson, a Linthicum Heights, Md., attorney who represents dealerships and lenders.

Mike Charapp, a dealership lawyer in Washington, told the paper that some banks require dealerships to repurchase finance contracts if they fail to confirm that customers are insured. He added that banks are also scrutinizing bad loans to determine whether a dealership overstated down payments.

Some banks have even required repurchase if dealerships failed to check the federal OFAC list of suspected terrorists and drug dealers, Charapp said.