South Africa is known for its high level of vehicle theft but losses to consumers and the industry don’t stop there – the ease with which stolen vehicles are effectively re-registered and re-enter the system perpetuates the cycle, writes Kriben Reddy, director: product development at TransUnion Auto Information Solutions.

The impact on the automotive industry, and specifically motor dealers, is significant. Access to information and reports that flag dubious deals and individuals, enables a more proactive and consistent approach to closing the obvious security and risk gaps.

The loss to a dealer, should a vehicle be identified as stolen or ‘cloned’ after it has been purchased, is the cost of the vehicle and the opportunity cost – anything from R80,000 to R800,000. Such a vehicle is immediately confiscated and impounded by authorities. This can be avoided by drawing a report on the vehicle and the individual selling the vehicle early in the game.

Reports that have been specially tailored to raise red flags on fraud or potentially fraudulent activities in this sector are inexpensive and easily accessed by dealers or even members of the public. These reports, now available from companies like TransUnion, are comprehensive and canny, drawing on a number of official vehicle, insurance, police, traffic, consumer credit and other databases to crosscheck the credentials of sellers and/or the authenticity of the vehicle.

More importantly, they can be accessed very easily and quickly – all it takes is one call or the use of a smartphone app.


Vehicle verification protects against cloning

Vehicles are being cloned with increasing regularity. The fraudster typically makes use of false registration plates from a vehicle of the same make and/or model. The plates may be stolen or simply duplicated. Or, if a vehicle is written off in an accident and its details are left on the system, these may be used for the cloned vehicle.

More sophisticated methods also enable fraudsters to change VIN numbers and other identifiers to that of a registered vehicle.

These vehicles may be acquired by a dealer and taken into stock. The ‘cloned’ status of the vehicle is then only discovered when further checks are made by, for example, financing institutions. This could have been avoided with a simple report request to the website or through use of a mobile app.


Proactive checks mitigate auto fraud risk

A basic first line verification report would, for example, check the following:

• If the features of the vehicle agree with factory specs (e.g., vehicle type and colour, engine size and badging);

• If the previous mileage history agrees with what is on the clock;

• If there is still a financial interest on the vehicle (e.g., an outstanding hire purchase agreement); and

• If there is a police alert for the vehicle.

The onus is also on the dealer to mitigate the risk of identity fraud, where a vehicle is fraudulently purchased by a bogus buyer with a false ID, or test drive fraud, where the vehicle is literally stolen via the hi-jacking of the vehicle on the test drive.

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