Whether it’s a first time car buyer, lease trade-in, enlarging family or satisfying your need for speed, buying a new car is supposed to be joyful, filled with excitement and anticipation. What’s not cool is finding out your customer and your business has been affected by identity fraud.
A sobering statistic recently reported by Javelin Strategy & Research is that in the past six years, American’s have lost $107 Billion to identity thieves. In 2016, identity theft was up 16% with 15.4 million US consumers losing $16 Billion. And to add salt to wound, the Federal Trade Commission has reported that 3.5% of fraud complaints are related to loan fraud.
Identity theft, as you can imagine, can be categorized as one of the worst personal setbacks a person can try to overcome. Along with the financial hardship that it brings to both the individual and businesses, it creates a loss of trust and emotional distress.
As a whole, the US financial industry has increasingly been taking steps to combat this epidemic; most noticeably implementing credit card chip technology or EMV (Europay, MasterCard and Visa) as the new standard for credit card verification. But when it comes to auto loans, what extra measures can our industry take in order to be more proactive?
Several options come to mind when discussing ways to prevent or deter identity fraud in dealerships. First, and the most obvious, is stop is processing a loan or credit application if you suspect identity theft. In many cases you are doing the victim a favor, but what about the times when you have a false positive situation? Your reputation could be impacted with poor customer service, which would erode the customer’s experience with your sales team. Having safe-fails in place could make a difference between doing a customer a favor or disservice.
Implementing proactive measures is worth the small investment – opposed to the lost revenue a fraudster could inflict by taking advantage of your customer’s personal information. Consider adding an Out of Wallet Authentication (OWA) process prior to running a full credit report or loan analysis. Choose a solution that leverages big data which will verify a customer’s proof of identity by asking a series of questions that are uniquely personal to the individual and is matched back to their personal, financial and work history. This process can be part of your online pre-qualification process or while the customer is at the dealership.
Another proactive tool is predictive analytics. Predictive analytics can help you understand your customer just a little bit more. Credit bureaus use predictive analytics to determine patterns in buying behavior, which could help determine if a purchase is in or out of character for the buyer. However, predictive analytics can also be used to help determine who is actively in the market to make a new purchase, which enables you to actively target market to a known in-market consumer.
Adding a little extra customer protection to your loan services could help prevent another possible identify theft and instill a little more confidence with your loyal buyers.