Dealerships are prime targets for post-hurricane scams

Not every dealership felt the impact of Hurricanes Helene or Milton. Even some in Florida, North Carolina, and other affected areas may have escaped the worst. So, no reason to stress, right? After all, floods and natural disasters are nothing new, and plenty of dealers have weathered them before.

Think twice: Scammers are always out there, finding new ways to target dealerships — whether they were directly affected by the hurricanes or not. Just because they’re not cleaning up water damage doesn’t mean they won’t be flooded by scams.

Why? Vehicles are big-ticket items, and transaction cycles are relatively short, so dealerships are appealing targets for scammers looking to make quick — and hefty — bucks.

Here’s what we’re hearing: A lot of dealers are almost too relaxed about the risks they could be facing. But here’s why they need to pay attention – Equifax is reporting a 59% increase in synthetic fraud cases since 2020. And guess what? The auto industry is one of the prime targets. 

Now, what do floods have to do with fraud? Scammers love to exploit these types of natural disasters. When things get chaotic, they jump at the chance to take advantage. Especially now that COVID-19 relief programs have ended — scammers have new targets. Security experts say the recent hurricanes make dealerships more vulnerable than ever to scams like these:

• Flood-damaged cars: Think CarFax vehicle records or similar reports cover it all? Not so much. Unless a car has been taken to a dealership or registered repair facility, flood damage might not even show up. Relying solely on automated reports could spell disaster. And it’s crucial for dealers to get those cars inspected, especially auction buys. A few minutes of due diligence now could save tons of trouble later.

• Synthetic Fraud: Disasters have a ton of sensitive customer information, making it easier for scammers to create “synthetic” identities by blending real and fake details. Unlike straight-up identity theft, synthetic fraud mixes real and fake information to make a completely new identity. Experts say dealers should double down on identity verification by using a blend of automated and manual checks to keep everything secure.

• Title washing: Scammers buy flood-damaged cars that insurance companies have labeled “salvage” and “wash” the titles in states with looser regulations. These cars end up back on the market with a “clean” title, but red flags can usually be found during pre-purchase inspections. 

• Phishing scams disguised as help: Even with plenty of training, sometimes dealership personnel inadvertently click on a suspicious link. After the CDK Global breach, fake emails claiming to be from CDK and other trusted vendors hit dealerships. It’s vital for dealers to close off entry points like weak passwords and ex-employee accounts.

Bottom line: Fraudsters are always devising new ways to scam. In order for dealers to protect their investments, it’s more important than ever to combine manual verifications with multi-layered tech solutions. Experts say that’s the best way to keep these scammers at bay.

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