Background Back in May, Sergeant Darren Schlosser, with the Houston Police Department Auto Theft Division — Vehicle Fraud Unit, conducted a webinar on “Vehicle Finance Fraud, aka How to Steal a Car with a Pen.” As the webinar could not be recorded, a summary of Sergeant Schlosser’s information is provided below. Types of Vehicle Fraud Vehicle financial fraud is estimated to cost the U.S. approximately $8.3 billion annually. The following are a number of ways that fraud is committed: • Document fraud occurs when a person uses their real name, DOB, driver’s license or SSN but produces fraudulent documents to increase their creditworthiness, such as paycheck stubs, utility bills, bank statements and insurance cards, because they are unable to qualify for a vehicle loan on their own merit. Fraudulent documents are used to inflate income levels and create a false job history and other financial information. • Identity theft occurs when one person steals the personal identifying information (PII) of another in order to steal their credit. This act entails the unauthorized use of another person’s name and PII, such as DOB, driver’s license number and SSN, to open new accounts for committing auto theft. • Credit Privacy Number (CPN) resembles a nine-digit SSN. A CPN is typically obtained under the belief that the person is attempting to protect their SSN or rebuild their credit history. A CPN can be acquired through websites for a fee or created by an individual using a child’s stolen SSN. The use of a CPN in lieu of an SSN is fraudulent. • Synthetic identity occurs when a person uses a fraudulent SSN in conjunction with either a Full Synthetic Identity or a Hybrid Synthetic Identity. This accounted for up to 20% of credit losses or approximately $6 billion in 2023. Fully Synthetic Identity An individual with a fully synthetic identity: • Creates a false name, DOB, DL and obtains a CPN. • Obtains a credit card under a false name and makes purchases and payments. • Builds a fraudulent profile to an 800+ Beacon score. • Creates fraudulent documents to support the fake name, such as employment records, paycheck stubs, bank records and utility bills. • Obtains a burner cell phone for fraudulent ID use and employment information. • Submits online credit applications to limit face-to-face interaction. • Enters a dealership only after credit approval. Hybrid Synthetic Identity An individual with a hybrid synthetic identity: • Uses their own identifiers such as name, DOB and DL. • Uses a “credit repair agency” to obtain a CPN. • Uses some fraudulent documents such as paycheck stubs, insurance cards and utility bills. • May be detected when the credit report has only recent activity. Problems Identifying Synthetic Identities Synthetic identities are often undetected by finance companies and seldom reported to law enforcement for a few reasons: • It is difficult to verify because no person exists to be a complainant, unlike identity theft. • It can be a “first payment default” or a few payments made in order to slow discovery. • Finance companies are reluctant to provide information due to “privacy laws.” Examples of Fraud Artificial Pay-off “X” makes a payment on their vehicle. “X” goes to trade in their vehicle and the dealership contacts the lender for a payoff. Dealership reflects the pay-off on the new purchase and shows the difference on the new retail installment contract. The dealership is unable to obtain the title on the trade because the lienholder informs the dealership that “X”’s payment bounced, and in order to obtain the title, the dealership must pay an additional amount to cover the NSF payment. Oftentimes, a large lump-sum amount is sent to the lender prior to trading in the vehicle so that the payoff appears to be much less. How to Steal a Car with DEALERS’ CHOICE 26
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