The latest news, trends, and data related to ID fraud in the automotive industry.
About the automotive ID fraud report
It’s no secret that fraudsters target the automotive industry using fraudulent identification. Whether it’s for test drives, auto loans, sales, or rentals, it is essential that businesses stay aware of ID fraud trends to ensure they do not fall victim to these criminals.
We found that across the automotive industry, an average of 4.15% of IDs that underwent verification showed signs of being fraudulent. These insights were derived from analyzing more than 1,700,000 ID verification transactions in the North American automotive industry from April 2023 to June 2024.
Fake IDs are most commonly produced outside the United States, and manufacturers are in a constant race to produce the most realistic IDs that will pass visual and electronic muster. While in the past, fake IDs might have been hastily printed, or contain obviously photoshopped elements, today’s fake IDs are incredibly sophisticated. Many have barcodes that can be scanned, ultraviolet and infrared markings, and security elements such as window panes, microprints, and textured lettering.
The quality of fakes makes them harder, but not impossible to spot. Although no technology is capable of catching 100% of fake IDs, our continuous testing routinely indicates that VeriScan ID Authentication is capable of detecting up to 95% of fake IDs and driver’s licenses. Checks against third-party data sources confirm the efficacy of our solution and the significant threat of ID fraud for automotive businesses.
We’re sharing our findings in this report to help better equip your business in the fight against fraud and theft.
Consequences of ID fraud in the automotive industry
Car dealerships and automotive industry businesses are a target for fraudsters, and large criminal enterprises, looking for opportunities to steal high-value cargo or take out fraudulent loans. According to Experian, identity fraud related in the automotive industry accounted for $619 million in losses in 2022 and 79% of car dealerships have reported experiencing identity fraud-related vehicle loss.
Automotive ID fraud demographics
While fraudsters may not always use an ID that matches their real age or gender, automotive businesses saw the most frequent usage of fraudulent IDs from individuals presenting IDs who claim to be male, between the ages of 36-55.
Which state IDs are most commonly faked?
Slightly over half of IDs flagged as fraudulent came from outside the state in which the business was located, so take extra care when verifying individuals who are presenting an ID from outside your home state. Of the fraudulent IDs, the states that were most common were Texas, California, New York, Michigan, and Florida.
When are automotive businesses most at risk of ID fraud?
Scans of fraudulent IDs tend to peak in the morning between 8 AM and 10 AM and again in the evening after 6 PM. There is a significant dip in the number of fraudulent IDs around lunchtime, from 12 PM to 2 PM.
ID fraud was at its highest point in October 2023 after a consistent 5-month increase, rising to almost double the yearly average of 4.15%. The trends in ID fraud correlate very similarly to the national average interest rates.
Using AI to create fake IDs
In early 2024, news agencies created a panic around new, AI tools for generating images of fake IDs. Although the tools don’t have access to the paper and printing materials to actually create physical fakes, they can create images of IDs (both front and back) that can be used in digital scenarios such as account opening or age verification at checkout.
We tested these IDs against our software and flagged 90% of the deepfake IDs as being fraudulent. Key security measures for specifically combatting the use of AI-generated fake ID images:
- Prohibiting manual upload of ID images
- Document liveness
- Face match – ID to photo
- Third party checks to determine accuracy of information
- Front/back crossmatch
Because these deepfakes are not physically printed and exist only as images, they are of highest concern for businesses that operate remote verification. As automotive businesses embrace digital ID use, it is essential to ensure all IDs are being properly verified.
Improvements after implementing ID scanning
Half of auto industry businesses that implemented an ID scanning product saw a significant reduction in fraud attempts after 3 months. Simply adding ID verification to the business reduced attempted fraud from 8% to 4.2%. Bad actors may be choosing other dealerships with less stringent security measures.
How to combat ID fraud in the automotive industry
Before turning over keys for a test drive, signing off on a purchase or rental agreement, or finalizing financing on a new car, it’s critical you know your customer’s true identity.
At IDScan.net, we believe in protecting automotive businesses from the risk of ID fraud by giving them tools to catch the largest percentage of fake IDs in an affordable, scalable way. In the past 12 months, we caught over 100,000 fraudulent IDs for our automotive customers, stopping potential fraudulent sales or loans that could account for millions in stolen revenue.
VeriScan
Catch 95% of fake IDs using VeriScan Authentication. With the scan of an ID, you can prevent identity theft, protect your bottom line, and ensure your customer verification processes comply with FTC Red Flags Rule.
DIVE
Protect yourself from loan fraud by digitally verifying customer identity before they ever arrive on the lot. Our DIVE Online platform allows you to initiate identity verification requests via text. Users are guided through an ID check and face-match selfie in <30 seconds. Easily track all verification requests, their current status, and whether they have been flagged or not, in one central portal.
If you are looking for a partner to help protect your business from the risk of ID fraud, contact us today.
