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A Guide to Recognizing the Warning Signs of Fraud

Aug 4, 2022

August 4th, 2022 | Jessica Gonzalez

Driving a new model, Informed.IQ is committed to working with dealers and lenders to raise awareness of fraud risks in the retail auto space. Watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks. Below is our guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs. 

Our  goal is to provide dealers and lenders with the information that will assist them in identifying red flags that can indicate an attempt to fraudulently purchase or lease vehicles.

What you need to know:

The number of identity theft and fraud complaints reported to agencies like the Consumer Financial Protection Bureau and the Federal Trade Commission has increased significantly, resulting in a push at all levels of government to more closely regulate auto lenders and dealers.

Increased regulation may lead to: 

– Increased overhead costs

– Higher prices for consumers

– Lower sales volume

– Lower profits and growth

Why you should care:

Awareness of fraud red flags allows you to take steps to reduce risks, resulting in a number of benefits including:

– Improvement in overall customer experience

– Reduction in consumer harm and reputational risk

– Reduction in credit stipulations 

– Reduction in funding delays to dealerships

– Reduction in past-funding disputes and potential unwinds

We actively seek your feedback and insights into trends and concerns related to the risk of fraud. If you notice unusual behavior or information by applicants, please contact Informed Fraud at  and we will direct these concerns to the appropriate team for review.

Fraud Risk: Application Misrepresentation 

Red flags:

– Income inconsistent with local salary rate

– Business revenue inconsistent with personal or self-employed income

– Income seems inappropriate for applicant age or employer

– Non-existent employer, unfamiliar employer name or no longer employed

– Address is a PO box or drop box/mail forwarding address

Checklist

  1. Pay attention to behavior

    – Does the customer appear nervous?

    – Are they relaxed and direct in answering?

  1. Pay attention to application details

    – Compare application information to the credit bureau report. Do the trade lines seem appropriate with the applicant’s stated income and employment level?

  1. Ask for income verification 

    – Call employer phone number

    – Request proof of income via Informed’s white labeled SMS experience. 

    – Request references via Informed’s CollectIQ without manual intervention. 

    – Verify income via third party data, through one seamless connection to Informed (ie TrueWork) 

    – Calculate income automatically when a consumer provides bank credentials through a seamless connection to Informed (ie Plaid)

    – Clear income stipulation documents in real-time utilizing Informed’s proprietary applied intelligence. 

Together, we can stop fraud. If you suspect possible fraud contact Informed Fraud at .

 

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About the Author: With more than 15 years’ experience in the financial services industry, including tenures at Santander Consumer USA and Visa, Jessica Gonzalez is now the Director of Auto at Informed.IQ.

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