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How to recognize elder abuse if your dealership is targeted

It sounds awful, because it is.

The illegal, unauthorized or improper use of an older individual’s resources by a caregiver or other person in a trusting relationship for the benefit of someone other than the older individual.

“This includes, but is not limited to, depriving an older person of rightful access to, information about, or use of, personal benefits, resources, belongings or assets,” according to the Enterprise Fraud Management (EFM) team at Santander Consumer USA (SC).

Examples include forgery, misuse or theft of money or possessions; use of coercion or deception to surrender finances or property, or improper use of guardianship or power of attorney.

PART 5

“We have seen an uptick in activity and awareness with elder abuse investigations at SC and amongst our peers in the Auto Industry,” said Mark Kasak of the company’s EFM team.

RELATED

What you need to know about fraud risk – and why you should care (Part 1)

Identity fraud can take ‘enormous toll’ on your dealership profits (Part 2)

How to change the odds in your favor against application fraud (Part 3)

What straw buyer fraud could mean to your dealership and how to avoid it (Part 4)

One report in a small-town newspaper in Georgia recounted how the niece of an elderly couple obtained guardianship over her uncle and aunt, then discovered that a sitter had stolen money from them to put a down payment on a vehicle for her boyfriend. The niece also discovered that her uncle’s name was on the car loan, but that the title was in his and the boyfriend’s names. There was no indication that the car dealership participated in the fraud.

“Perpetrators of elder financial abuse are often family members, friends, caregivers or the common predatory scammer, but the result is usually the same,” said the Massachusetts Office of Consumer Affairs. “The victim is robbed of his or her savings or income and left in despair.”

Here’s what Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests to look for to reduce elder abuse fraud risk at your dealership:

The Red Flags

  • Buyer applies with an older adult to be the co-buyer
  • Older adult can’t come to dealership to sign contract
  • Older person makes statements like “I’m only here to help”
  • Applicant and co-buyer have different addresses
  • No reasonable benefit to the older adult in the vehicle being purchased
  • Older adult is on a fixed monthly income that does not support the vehicle payment

And the Checklist

  • Both applicants present at time of contract signing
  • Don’t allow the contract to leave the dealer premises
  • Ask about power of attorney and caregiver relationship
  • Ask older adult for independent references and contact the reverences

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says Driving a New Model, which was created by SC’s fraud management group. “Watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

Santander Consumer, Chrysler Capital get valuable ‘face time’ at NADA

It’s one of the biggest auto industry events of the year.

The National Automobile Dealers Association convention (NADA) – held this year in San Francisco, CA.

Both Santander Consumer USA (SC) and Chrysler Capital were represented at the event, held Jan. 24-27, CCAP with an exhibitor booth on the convention floor and a co-branded special event.

Distinguished Dealers cruise on the California Spirit.

Distinguished Dealers cruise on the California Spirit.

They were among the 22,000 attendees – including thousands of dealers – and more than 500 exhibitors who participated in the four-day convention and expo, which included keynote sessions with industry experts and key business leaders, more than 120 workshops and education sessions, speakers on dealer solutions, a social connection zone, dealer franchise meetings and more.

Santander Consumer and Chrysler Capital hosted a co-branded event, a cruise around San Francisco Bay for 80 of our distinguished dealers, key dealer groups and digital partners such as Cars.com.

Mixing business with pleasure.

Mixing business with pleasure.

“NADA is great, because it provides leadership from Santander Consumer and Chrysler Capital the opportunity to get a significant amount of face time with dealers and OEM partners from around the country,” said Matthew Stewart, vice president of marketing. “We do a lot of listening to dealers on the convention floor and during various events – hear what the dealers themselves are thinking unfiltered.”

“NADA gives us an opportunity to see our dealer partners in a different setting, away from the stresses they deal with every day,” said Vince Meglio, senior vice president of SC sales. “That allows them to focus on the big picture and long-term plans for their future.”

“It also allows us at SC to intently listen to their hopes, along with sharing our ideas for the future and how we can partner with their specific dealership for mutual success,” Meglio said.

Spirits were high on the co-branded Bay cruise.

Spirits were high on the co-branded Bay cruise.

“It’s so productive to have that many dealers and business partners in one place,” added Sales Director Barbara Fortune. “It allows us to share ideas with our dealers and enhance relationships.”

Sales Director Eleni Egoville described “in-depth and nuanced conversations with dealers.”

Convention speakers included Wes Lutz, president of Extreme Dodge-Chrysler-Jeep-Ram in Jackson, MI, and outgoing NADA chairman, who encouraged dealers to embrace change that is happening industrywide, continue to listen to their customers and “writing the script” about the industry’s future.

“Our customers tell us what they want from the market every day when they spend their money,” Lutz said. “And no one listens to the customer better than we do.”

Lutz is being succeeded as NADA chairman by Charlie Gilchrist, whose Gilchrist Automotive comprises eight dealerships in the Dallas-Fort Worth area, including Ford, Buick, GMC, Chevrolet, Nissan and Volkswagen as well as Chrysler, Dodge, Ramp and Jeep.

NADA, which has hosted an annual convention for more than 40 years, represents nearly 16,500 franchised new car and truck dealerships.

Sightseeing at the Golden Gate Bridge.

Sightseeing at the Golden Gate Bridge.

 

Cruising past Alcatraz in San Francisco Bay.

Cruising past Alcatraz in San Francisco Bay.

WHERE’S THE BRIEF

Your 30-second guide to the latest news, updates

 

The Nissan Kicks crossover saw its best month of sales in Dec. 2018 since launch at 5,704 units.

Game plan to score big this tax season

Fourth-quarter trip to the red zone

Checklist is key to tax season results

Top 5 pitfalls to avoid on deal packages

Change your odds vs. application fraud

Customer loyalty climbs to record level

Fraud can take ‘enormous toll’ on profits

What you need to know about fraud risk

U.S. vehicle sales cruise to ‘very good year’

 

Checklist is the key to your 2019 tax season sales results

Tax season is a great time to set up a successful 2019.

There really is no other time of the year that so many shoppers have an extra $3,000 or so – approximately the average refund – to put down on a new or used vehicle and fuel your sales results.

But ensuring the launch comes off without a hitch requires certain best practices when working with Santander Consumer USA.

Use this best-practices checklist to ensure your dealership makes the most of tax season.

 

021419 IL Checklist is the key to your 2019 tax season sales results

What straw buyer fraud could mean to your dealership and how to avoid it

Beware the straw buyer.

That is, a purchaser who looks like the real thing – but isn’t.

The buyer could be someone purchasing the vehicle for a consumer with disqualifying credit issues, or he/she could be “a criminal who is perpetrating a fraud scheme.”

Such as the Wisconsin man who authorities have charged with a dozen counts of money laundering that involved selling luxury cars overseas by defrauding local car dealers. Using dozens of straw buyers, the man allegedly secured $30 million in financing to buy the vehicles.

PART 4

“To a lender, a straw buyer might look like a real buyer,” wrote Frank McKenna, chief strategist at PointPredictive, a consulting firm specializing in fraud prevention. “[But] their whole purpose is to get a lender to give money to an organized group of crooks.”As in the Wisconsin case, selling to a straw buyer or buyers can hit a dealer’s bottom line hard.

RELATED

What you need to know about fraud risk – and why you should care (Part 1)

Identity fraud can take ‘enormous toll’ on your dealership profits (Part 2)

How to change the odds in your favor against application fraud (Part 3)

“Lending to straw buyers/borrowers often leads to extremely high levels of default … In fact, most loans will default without a single payment,” wrote McKenna, who calculates that “at an average loss of $24,000 per fraud occurrence, your dealership is forced to sell 10 cars to make up for a single instance.”

Here’s what Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests to look for and to reduce straw buyer fraud risk at your dealership:

The Red Flags

  • Applicant is declined and then returns with a co-buyer
  • Co-buyer has a different last name and/or address
  • Applicant asks to take contract to co-buyer
  • Primary and co-buyer continue to change on the same vehicle application
  • Insurance policy lists multiple vehicles with different last names

And the Checklist

  • Both applicants present at time of contract signing
  • Don’t allow the contract to leave the dealer premises
  • Ask for references on both applicants, and contact the references
  • Ask who will be making payments while both applicants are present

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says Driving a New Model, which was created by SC’s fraud management group. “Watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

The top 5 pitfalls to avoid when submitting deal packages to SC

Tax season sizzles for most dealerships.

That means getting through the funding process is going to be extremely important to keep business flowing smoothly through March and April.

Santander Consumer USA (SC) will be working hard to manage the flow of tens of thousands of contracts from dealers that will be needed to finance new and used vehicles during these busy months.

The goal at SC is to have complete contract packages funded within 24 hours. Yet, with so many contracts there are bound to be small hiccups here and there.

For example, calling about a contract before 48 hours has passed – 72 hours in the case of tax season – actually slows processing of contracts to all dealers, and will not move the caller’s funding package ahead of others that have been in house longer.

Otherwise, here are the top five pitfalls some dealerships encounter – and you can avoid – when submitting deals to SC funding that can slow down the process:

We can’t get in touch with the applicant

When funding receives a deal, chances are that some information will need to be verified before the deal is given the green light. If funding doesn’t have the correct contact information for your customer, the deal can’t be finalized. It’s critical that phone numbers and/or contact people are correct so that funding can reach them if necessary.

Submitting incomplete contract packages

Our funding team can’t complete your deals until all of the documents in the package are received. By using SC’s funding checklist, it’s easier to ensure your funding package is complete.

The approval terms don’t match the contract

If multiple approvals have been received for the same customer, double-check your documents to make sure the correct approval sheet is attached to the contract package. In addition, check with your buyer before making changes to the approval terms. These two steps can save a significant amount of time and confusion once the package hits funding.

Income is not verifiable

Reviewing the customer’s paystub prior to completing and submitting an application can save time down the road. A lot of customers will provide their net income versus gross, and some just take a wild guess when completing a credit application. Request a check stub from your customer, and review it with them to ensure the proper monthly income is entered on the application.

Vehicle value does not match the value on the approval

If a customer changes his/her mind about which vehicle to purchase, it’s critical to update the vehicle with your buyer. Send an update via Dealertrack or RouteOne alerting your buyer to the change, and get an updated approval so there won’t be issues that delay your funding. You also have the option of updating the vehicle in our Rehash Tool. Just log in to the Dealer Extranet to update your structure for a quick look at what the changes will mean.

Tax season presents a wealth of opportunities to boost your bottom line to the top of the charts. So don’t let small pitfalls keep your dealership from achieving your goals.

If you have questions, contact SC funding from 8 a.m. to 7 p.m. CT, Monday through Friday, at funding@santanderconsumerusa.com or 800-877-4696.

 

020719 IL Putting a premium on accurate paperwork can help deals flow smoothly (2)

How to change the odds in your favor against application fraud

When the numbers just don’t add up …

It could be an honest mistake or a misunderstanding.

Or it could be fraud, specifically, application misrepresentation, according to a dealer brochure developed by the Enterprise Fraud Management team at Santander Consumer USA.

A good time to figure that out is when the customer applying for financing is sitting right in front of you.

091818 IL What you need to know about fraud risk – and why you should care_V4

PART 3

“Only about 15 percent of auto loan fraud is identity theft,” wrote a fraud strategist from PointPredictive consulting firm. “So if your only fraud control is checking a driver’s license or Social Security card, then you are really only addressing a small fraction of the risk.”

The risk with every auto finance application also includes:

  • Income fraud in which a borrower lies about his/her income.
  • Employment fraud in which the borrower lies about employment, work history or job title.
  • Document fraud in which a borrower falsifies pay stubs to substantiate income claims.

RELATED

PART 1: What you need to know about fraud risk – and why you should care

PART 2: Identity fraud can take ‘enormous toll’ on your dealership profits

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

SC’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce application misrepresentation risk at your dealership:

The Red Flags

  • Income inconsistent with local salary rate.
  • Business revenue inconsistent with personal or self-employed income.
  • Income that seems inappropriate for the applicant’s age or the employer.
  • Non-existent employer, unfamiliar employer name or no longer employed.
  • Address is a P.O. box, drop box or mail forwarding address.

“It’s quite common for employment information to be fabricated during the auto-lending process,” cautioned the PointPredictive consultant.

And the Checklist

  • Pay attention to buyer behavior, such as nervousness or indirectness in answering questions.
  • Pay attention to application details by comparing application information to the credit bureau report – do the trade lines seem appropriate with the applicant’s stated income and position?
  • Ask for income verification via pay stubs – make sure they’re genuine – or other documentation. Call employer phone number and contact references.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud … in the retail auto space,” says the company. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

Identity fraud can take ‘enormous toll’ on your dealership profits

There’s not much question that identity fraud is an important issue for businesses, including automotive dealerships.

Last year alone, nearly 10,000 reports of identity fraud related to auto financing and leasing were compiled by the Federal Trade Commission, or one for every 3.7 dealerships in the United States, and a 43 percent increase over the previous year.

But with odds of only one in four, why should you worry about identity fraud?

091818 IL What you need to know about fraud risk – and why you should care_V4

PART 2

“You should be concerned with fraud because of the hit your profits can take,” wrote Frank McKenna of PointPredictive consulting firm in a recent Digital Dealer Magazine report. “Car dealerships that have had a problem with fraud in the past report that it can take an enormous toll on their profits.”

McKenna wrote that it can take the profit of 10 good loans to recover the cost of one fraudulent loan. Although that figure could be even higher based on average cost data – around $25,000 per vehicle – from the U.S. Bureau of Economic Analysis and average gross profit data – ranging from $2,000 to $2,500 – from the National Automobile Dealers Association (NADA).

RELATED

Part 1: What you need to know about fraud risk – and why you should care

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce identity fraud risk at your dealership:

The Red Flags

  • Consumer or service member alerts on credit report.
  • Social Security number (SSN) issued within the last five years.
  • Recently opened trade lines, thin file or credit history, and a high number of inquiries in the recent past with no new accounts opened.
  • Applicant is listed as an Authorized User – Not the Primary Account holder on multiple accounts. Fewer than 3 primary accounts.
  • Discrepancies and/or inconsistencies between a credit application and credit bureau report.

And the Checklist

  • Examine and thoroughly review government identification for any suspicious conditions – tilted font lines or evidence of physical damage on a driver’s license or state ID, for example – and match the SSN to first and last name on the driver’s license or state ID.
  • Match government identification to details on the credit bureau report.
  • Ask dynamic, knowledge-based questions about specific trade lines from the credit bureau, such as “Who financed your last vehicle?” and “What is the payment amount?” This may help us confirm we are speaking to the actual applicant.
  • Compare the customer personal attributes to the credit bureau report – does the age seem appropriate to the person with whom you are speaking, for example.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says the brochure, Driving a New Model, which was created by SC’s fraud management group. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

What you need to know about fraud risk – and why you should care

It goes without saying (almost) that an auto lender such as Santander Consumer USA (SC) would be concerned about the threat from fraud.

Most auto dealers also would agree that it poses a risk to their businesses.

But few would suggest that fraud is as easy to identify and deal with as it is to acknowledge.

So why should you care if your dealership hasn’t had a problem? You’ve heard the old saying that “past performance is no guarantee of future results.” Well …

091818 IL What you need to know about fraud risk – and why you should care_V4

PART 1

“The number of identity theft, fraud and elder-abuse complaints … has increased significantly, resulting in a push at all levels of government to regulate more closely auto lenders and dealers,” says an SC-produced brochure, Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs.

“Here in the U.S., fraud is on the rise in a big way,” wrote Frank McKenna of PointPredictive consulting firm in a separate Digital Dealer Magazine report 5 Reasons Car Dealers Should Be Concerned with Fraud. “Massive data breaches, like the Equifax breach, have given criminal fraudsters access to more information to defraud consumers and businesses. That is why we can expect more fraud perpetrated and more losses incurred than any other point in history.”

McKenna reported that “fraudulent applications could exceed $6 billion” this year, with one in every 200 applications containing information that could lead to a problem with the loan after funding.

Driving a New Model was produced to help dealers identify and take action against this threat.

“Awareness of fraud and elder-abuse red flags will allow you to take steps to reduce these risks and will result in a number of benefits,” according to the SC pamphlet.

Driving a New Model suggests those benefits could comprise:

  • Improvement in the overall customer experience
  • Reduction in consumer harm and risk to the dealer’s reputation
  • Reduction in credit stipulations on an application
  • Reduction in funding delays to dealership
  • Reduction in post-funding disputes and potential unwinds

Our upcoming series, Driving a New Model, will help dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

“Establishing a partnership with lenders is the best way to fight fraud,” wrote McKenna. “Since lenders have more tools to diagnose and detect fraud, they can help you understand the impact to you before it ever happens. Good collaboration on fraud is the key to winning the war on fraud.”

U.S. vehicle sales beat expectations, cruise to a ‘very good year’

The experts didn’t see it coming.

New-car sales were supposed to drop in 2018, according to most analysts, with early predictions around 16.6 to 16.8 million compared to 17.2 million in 2017.

But dealers remained optimistic, based on results of a Cox Automotive survey.

“Although price pressures and costs are working against them, we continue to be encouraged by the fact that dealers are optimistic about market prospects,” said Jonathan Smoke, chief economist of Cox, to Autodealer Today magazine before the year even started.

2019 Nissan Kicks

So who had a better measure of the market?

It wasn’t until mid-year – when there were growing signs that 2018 vehicle sales actually could beat those early forecasts – that the experts conceded the year might turn out better than expected.

“At a glance, it appears that forecasts may have been slightly underestimated,” reported CBT Automotive Network in June. “Surprisingly positive results from most major automakers have helped keep the retail automotive industry from sounding the alarm in the first half of 2018.”

“But it’s much too early to celebrate,” cautioned CBT. “While 2018 started strong in auto sales, there’s a very strong possibility that sales will erode in the third and fourth quarters.”

Another good month

Then came June results as the fourth month of the first two quarters with a sales increase.

Not long after, Forbes reported that “despite generally good conditions, automakers are in for a rough finish to 2018,” based on an interview with a senior economist from Cox.

But the months of August and October also beat out 2017 results, and November sales brought the year to around 16 million, ahead of 2017, based on data from the automakers themselves and the U.S. Commerce Department’s Bureau of Economic Analysis (BEA).

And that set the stage for December, the strongest sales month every year since 2015.

Four-year win streak

Although December was only the third-best sales month this year – both March and May were higher – the total passed 17.2 million reported by the automakers in 2017 to 17.3 million. That makes 2018 the fourth consecutive year of more than 17 million in vehicle sales.

And, finally, the experts got it right. Well, sort of.

“There is no denying 2018 was a very good year for the U.S. auto industry,” said Charlie Chesbrough, senior economist, in Cox’s December forecast. “Many economic factors pointed to a slowdown in the second half of the year, but sales remained in high gear.”

Market uncertainty?

But in comments to Seeking Alpha, an Edmunds manager found a negative spin for the results.

“Automakers continue to rely heavily on upping fleet sales to mask eroding retail demand, and that’s not a sustainable place to be,” the Edmunds manager said. “A record number of lessees returning to the market should help give dealers a boost in the New Year, but rising interest rates and vehicle costs are going to continue to give car shoppers pause and create uncertainty in the market.”

Forecasts for 2019 now range from 16.5 million to about 17 million, according to a Bloomberg report, Don’t Be Fooled: The U.S. Auto Sales Party Is Coming to an End.

But that’s not very different from 2018, which turned out to be a pretty good year, after all.