By Desiree Homer
Sure, identity theft is always an important concern for anyone. But when the pandemic forced thousands of workers to conduct business remotely, and many retailers to embrace digital business models, there also became an opportunity for the bad guys to reach a bigger online pool of people. More specifically, within the automotive industry, lenders are worried about fraudulent activities on the loan side and the vulnerability of a new population, ripe for credit rating degradation. TransUnion is already warning of phishing attempts on consumers, with claims of offers to wash their credit. Other scams are posing as contact tracers and calling on people to secure personal information. While fraud isn’t a new challenge, it’s a reminder to dealers that there are effects and new risks in this COVID-19 environment.
What the Scammers Are Doing These Days
TransUnion, one of the primary three credit reporting organizations, is sending some stern warnings to anyone who conducts business online these days. The tech-savvy criminals have a broader audience and a new menu of opportunities to fool consumers and hack businesses. Some attempts, already reported, include those trying to remove legitimate loans or credit-related products from their reports. Others are exploring what they call a synthetic identity theft, where the bad guys produce a new identity by combining factual and fake information. TransUnion conducted surveys on June 30, and the results are staggering. More than 8% of those adults questioned admitted that they had fallen for a phishing scam. Most people might not be comfortable admitting, even in a blind survey, that they had been taken for a ride, so the fraud experts suggest this percentage is realistically much higher. And 31% of those surveyed admitted they had been targeting by scams. LexisNexis Risk Solutions’ director of fraud and identity, Kimberly White, said their data shows a 50% increase in manipulated identity fraud risks this March from March 2019.
A Leading Concern for Auto Lenders
The lenders are on high alert these days because of the influx of fraudulent attempts on consumers. Anyone falling prey to the scams, and the reports suggest there are thousands who already have, will face long-term risks and consequences. Credit ratings can be significantly compromised and time-consuming to correct when scammers are successful at creating multiple accounts under stolen information. Consumers are already panicked about household finances, with job loss and economic shutdowns. Paying the bills is already a source of tension for many. Having their credit ruined due to identity theft and scams will only make it harder for them to rebound. And when consumers have damaging credit scores, it makes it nearly impossible to secure auto loans.
What Dealers Can Be Doing
Right now, many dealers are reporting great numbers for June and anticipating a return to normal. But the rise in online activity and subsequent phishing scams is a reminder that there are other side effects of the pandemic. It’s still prudent to be cautious and imperative to be aware of protections for any online engagements you may be leveraging. In episode 62 of the Dealer News Today podcast, Jonathan Smoke, Chief Economist with Cox Automotive, warns dealers not to get caught up in a false sense of positive momentum. The market could slide back over the next three months as the shortage of new inventory, and volatile used inventories have real-time effects. Conditions may be heading in the right direction for now, but it’s not time to let down your guard just yet.
Whether you take a proactive approach to warn customers of fraudulent activities or spend a little extra time to make sure your software and online engagement platforms are robustly protected, it’s a good idea to be doing something. Risks and scams are on the rise with potential consequences for consumers and retailers alike.