Increased Fraudulent Activity 

Upward Trend in Fraudulent Vehicle Purchases Across Canada

Over the past few months, we have noticed a significant increase in fraudulent activity related to online vehicle sales at dealerships across Canada. This can at least be partially attributed to the COVID-19 pandemic as there has been a marked decrease in face-to-face transactions and a corresponding general trend towards increased online sales.

Criminals are taking advantage of the current situation by creating false digital identifications and in turn using the fraudulent documentation to facilitate vehicle purchases. They do this with the understanding that fake digital identifications are easier to produce and make it harder for dealerships to detect criminal behaviour when finalizing a deal online. Using their false identities, would-be thieves go through the financing process, receive a standard conditional approval through the financing institution, and then state there is an urgent need to take delivery of the vehicle. At this point, fake insurance documents are provided, the vehicle is delivered to the customer, and the thief and vehicle are never seen again (with payments never made and/or the final approval rejected by the financing institution).

Best Practices

As these fraudulent instances can be difficult to identify while finalizing a deal, we have listed below some best practices in an attempt to reduce the occurrence of these situations:

• Pre-qualify the customer from the beginning regarding when they would like to take delivery. If they indicate urgency, try to determine if there is a valid reason.
• Ask the customer to wait for delivery until final approval is obtained from the financial institution.
• Have all documentation for online purchases finalized in store.
• Try to capture video/images of the customer on dealerships cameras, if possible.
• Review at least three pieces of government-issued identification in person.
• Obtain a copy of the customers’ ownership and insurance documentation on their existing vehicle as we have noticed that most fraudsters are dropped off at dealerships.
• Call the insurer regarding the proof of insurance to verify that coverage is in place, as fraudsters do not actually obtain insurance — opting instead to provide a fake insurance slip or binder.
• Ensure that the lienholder on the insurance slip matches the financing documentation.
• Implement usage of a counterfeit detector to review government issued identification, such as driver’s licences and passports.
• Obtain a deposit that is not refunded until the final approval is verified by the financial institution. 
• Have another employee review the file in a case of uncertainty about the customer.

Detecting Counterfeit Driver’s Licences

• Hold the driver’s licence in your hands. Do not let the customer just show it to you and have them take it out of any case/holder.
• Feel for extra thickness around the photo and edge of lamination. This may indicate that a second photo placed on top of the original and was then re-laminated.
• Look for consistency in the font. If the numbers and letters are not the same thickness, weight, and colour, the licence may have been altered.

For more information on loss control, please contact your Marsh Risk Consulting representative:

Sathyan (Sath) Laloo
416 200 0943 | Fax: 416 349 4564
sathyan.laloo@marsh.com
 

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