3 key indicators of potential fraud your used car dealership should look out for
How well do you really know your customer? Have you ever completed a deal where you thought ‘something isn’t quite right here’.
In 2016 – 2017 the National Crime Agency 3.4 million incidents of fraudulent activity.
Connected have trained expertise in our teams to help detect fraud. Meaning when a case comes to our attention, the application is canceled. However, wouldn’t it be great if we had a better insight into what to look out for in terms of fraud.
We don’t usually assume there are many fraud cases that occur in our car dealerships, and whilst it isn’t as common we should always be prepared. Spot it right off the bat before the deal is sealed.
What should I look out for?
1. Coercive Control
Coercive control is an aspect of financial abuse where a person is being forced into an agreement against their will, these are most likely by partners or friends.
This controlling partner will usually make sure they are present at all times, especially financing a used car and signing a motor finance agreement. They may do most if not all of the talking and agree with everything the used car dealer is saying. They won’t allow the applicant to make decisions.
Sometimes, coercive control can result in a forced accommodation deal.
An accommodation deal is where someone takes out a finance deal on behalf of someone else which may be a red flag for fraud.
As a used car dealer and motor finance broker, we need to be aware and make sure the applicant is 100% behind the application and not showing any signs of being coerced. To do this, the dealer needs to speak with the applicant ONLY, or any other customer vulnerability which may mean they need help to communicate with you, and all confirmations have been agreed upon with the individual alone. This is due to the fact that when it comes to making big life commitments, like financing a used car, controlling partners like to be in charge of the applicant’s finances so that their partner can solely depend on them.
2. False Driving Licences
This regards to cross-referencing all details on a driving licence to the applications and double checking the following:
Make sure the UK flag is up to date for the year the driving licence was issued.
You should also make sure the hologram is placed correctly based on the year the licence was issued.
Have a document saved in your files for examples of what they should look like or have them printed off and posted on your wall next to your desk.
3. Money Laundering
In simple terms, money laundering in a car showroom environment, is placement of illegally obtained cash into the financial system by way of payment of deposits.
Why do people launder expensive luxury transport items? Money launderers may target car dealerships because they believe that they are less regulated than banks and investment firms. There also may be less awareness of AML [Anti-Money Laundering] requirements among car dealerships.
How is money laundered?
In an attempt to money launder, one method is that car buyers pretend to buy a used car and putting a deposit down, then pulling out of the deal and demanding their deposit back. This is done in order to convert illegal funds into legitimate funds. Keep an eye on these cases and report them so they can investigate.
What’s the process when fraud is found?
Applicants’ details are reviewed and in certain instances, are checked. Either with the bank to confirm transactions highlighted on a bank statement and received matches with the bank’s systems. They investigate if the statements have been altered or photoshopped and employers are contacted to check if the applicant works there.
If fraud is found, then the application is declined and reported to Fraud Prevention Agencies. This will allow other members of the agencies to pull and review their applications if there are matches and for them to carry out their investigation.
The FCA will be taking steps to improve its partnership with the government and law enforcement in order to minimize the risk of fraud for car dealerships.