In Warren, Michigan, one woman brazenly stole eight cars from various dealerships over the course of several weeks before getting caught.  A man in Norfolk, Virginia stole two cars from area dealerships. A Greenville, Georgia man used a fake ID to test drive a Corvette, then disappeared before being arrested.

How did they do it? By disappearing on test drives. 

What is test drive fraud?

In test drive fraud, criminals present automobile dealers with a fake ID in order to take a car for a test drive. Unfortunately, they never return, leaving the dealership to foot the bill for the stolen car.  It’s a tactic that is becoming more common, and it’s enabled by identity fraud.

Common Test Drive Fraud Tactics

In the aforementioned crime, the perpetrator, wearing a pandemic mask, presented the auto dealers with a stolen ID. But there are other more sophisticated ways to commit identity fraud. 

In true name fraud, which spiked from 7% in 2017 to 15% in 2018, bad actors use a stolen driver’s license and social security number to create a fake identity. In synthetic fraud, fraudsters create a fictitious identity with a combination of real and invented personal information. According to the federal reserve, 85-95% of synthetic fraud is not flagged by traditional identity verification models.

Losses due to these types of identity fraud are hard to recover, with stolen vehicles–sometimes from a test drive– often being dismantled and shipped overseas.

Why now? 

The reasons for the fraud explosion are two-fold. 

During the pandemic, auto dealerships moved their businesses online to accommodate social restrictions. Fraudsters became adept at using false and stolen identities. Masks also made traditional modes of identity verification challenging.  And when customers could no longer conduct test drives at the car lot, auto dealers began to deliver cars to residences. 

Unfortunately, bad actors drove away, never to return. 

Other industries, such as financial services, have tightened their identity verification processes, making it increasingly difficult for fraudsters to game their systems, forcing bad actors to shift their targets. Many put the automotive industry in their sights. 

Defending Against Test Drive Fraud

Dealerships need to be vigilant regarding fraudulent activities in the automotive industry so that they can create systems that deter criminals and train their employees on what red flags to look out for. 

For example, If a customer is rushing through the car-buying process, slow down and ask questions, which will likely deter potential fraudsters. If a deal seems too good to be true, it probably is. 

Additionally, adding a drivers license scanner for car dealerships can immediately show potential criminals that your dealership is serious about identity verification. IDScan.net offers ID scanning solutions for the automotive industry.

Contact us to learn more about how our ID scanning solution works to protect your business.