Putting the Brakes on Identity Theft

In today's high speed world, almost everything is touched by technology. With an iPod and a Smartphone in your pocket, a laptop in your briefcase and a GPS on the dash, this "age of technology" provides access to information like no other time in history.

With data available at the click of a mouse, why are so many dealers failing to use technology to verify a customer's identity? Simply checking a driver's license is not enough; fraudulently created licenses are used to scam even the most discerning eye. That's why dealers across the country are turning to new technologies that scan billions of public records in real time to locate and confirm identities.

With the advent of real-time, online, virtual identity verification solutions, there are now more effective ways to protect your customers and your bottom line. Just like you wouldn’t drive your car without insurance, you shouldn’t sell a car without ensuring your customer’s identity. For less than a dollar, an online verification is an invaluable investment. In addition to protecting your revenue and reputation, having systems in place to prevent fraudulent activity is mandated by federal regulation. As a matter of best practice and to comply with the impending Red Flags Rule, it is an important service for your dealership.

The question you may be asking is, "Why should I go beyond asking for traditional verifying documents such as a driver’s license or other paper form of verification?" Well, consider Mr. Smith: you've known Mr. Smith for 10 years. He attends your church, you've seen him at your son's soccer games and he's purchased cars from your dealership in the past. For all intents-and-purposes, you know Mr. Smith.

When it comes time for him to purchase a new vehicle, you will probably not find it necessary to verify his identity beyond standard documents, if at all. Now consider Mrs. Jones. She enters your establishment interested in purchasing a vehicle. You have no connection to Mrs. Jones; she is a new face to the dealership. Prior to handing over the keys, you will be inclined to verify her identity, but is a driver’s license enough? Perhaps Mrs. Jones is in fact Ms. Robinson posing as Mrs. Jones and using a stolen identity, she just pulled away from your lot in a shiny new car. You are out a car, the police are pulling in and the fines from Uncle Sam are racking up. For less than a dollar and a minute of your time, you could have prevented Ms. Robinson from wreaking havoc on your business.

So what does virtual identity verification entail? The process is simple and elegant. By logging in to a web-based application, managers can enter general customer information such as a full name and address and with a single click, generate multiple choice “knowledge-based” historical challenge questions; the answers to which should only be known if the customer is who they say they are.

Questions correctly answered can help assure an authentic identity. Incorrect answers indicate a high risk possibility of fraudulent activity. This quick and easy process prevents the headache, hassle and cost of identity theft. Most dealers using an online verification solution say that this step works best after the sale is made and during the initial stages of the F&I process.

You might also be wondering how customers react to these challenge questions and how the questions might impact the all-important closing of the sale. Dealers interested in using this kind of service should consider vendors that offer well-constructed questions. For example, questions should avoid credit information that may already be in the hands of a fraudster. In addition, questions should be constructed in such a way as to reduce concern regarding privacy. In general, well-constructed knowledge-based questions will substantiate the customer’s identity without being intrusive and will skillfully balance practicality and efficacy.

Dealerships implementing this kind of online identity verification report very positive effects. For example, the general manager at McElveen Auto in Charleston, S.C., says: “Our identity verification solution, when put in the F&I process, not only builds trust between us and our customers but it actually helps us close deals.”

People are generally aware of the growing risk of identity theft and are grateful to know that their dealerships take this problem and their safety seriously. Identity verification solutions are a simple and affordable way to protect your dealership and customers by preventing acts of fraud before they happen.