Maldem Investigations - Private Investigations agency in Ottawa



Buying a car at a dealership with false or stolen identities and credit information is relatively easy and can be very lucrative. For this reason, this type of fraud is on the rise and attracts organized criminal groups who have the infrastructure and the resources to obtain several vehicles at a time (sometimes from the same dealership), store them temporarily, and later ship them overseas to be sold at significant profit margins.

While fraudulent sales of vehicles for personal use still happen on a regular basis, they mostly involve low-end automobiles and individuals without resources to produce quality false identification cards or carefully crafted falsified financial documents to support their credit applications.

Since those individuals only do this type of fraud occasionally, they often make a lot of mistakes and show numerous red flags in their behavior and the documents that they bring with them to the dealership. A quick glance at those (assuming that the sales staff is vigilant and knows what to look for) can reveal plenty of signs that would warrant additional safety measures to be implemented and verifications to be conducted before the vehicle is to be sold and delivered to the client.

It is also much easier to track down and recover those vehicles since, among the many mistakes that those fraudsters make, they leave behind several clues and leads that can be pursued during an investigation. Additionally, those vehicles often remain within the province and are used by the individuals themselves in their daily lives, which facilitates the tracking and recovery efforts. 

The same cannot be said about professional criminals with experience and resources to produce high-quality fake documents that do not leave many leads behind (at least initially). The vehicles are usually moved out of the country rather quickly, making their recovery almost impossible unless action is taken promptly and the vehicles are intercepted in their temporary storage location.

It is very difficult, if not impossible to track down a single vehicle that was obtained through a well thought out fraud by an experienced fraudster since the strength of a well-organized group is the availability of resources and established processes that can be used repeatedly and successfully while only requiring small changes (ex: different address and name) in the scheme in order to avoid being caught right away.

Putting in place a well-oiled process of preparing and altering documents, finding and convincing people to play the roles of real individuals (whose identities were stolen), finding and convincing straw buyers, picking up the vehicles from the dealerships, finding locations to store them, transporting them locally, and having the connections to ship them overseas, requires resources that are not as easily replaceable.

This means that within the main strength of an organized group also lies their main weakness. When organization and structure are present, there is always a pattern; and patterns can be studied and analyzed. Those patterns can help dealerships identify certain criminal groups by their “signatures” thus providing them an opportunity of recognizing the dangers and taking action before losing another vehicle.

Unfortunately, the word pattern also implies that it takes multiple incidents (of fraud) before an effective analysis can be conducted. However, given the appetites of criminal groups for easy profits, it very common for the dealerships to be hit numerous times by the same organizations within short periods of time, which provides ample opportunities to collect sufficient data for an analysis and an investigation.

Why conduct an analysis and an investigation?

When a car dealership offers in-house financing, then, with the loss of the vehicle and the loss of subsequent payments (which usually stop after the first month or as soon as the vehicle had successfully left the country), the dealership suffers a direct financial loss. And while the impact of a single fraud can be accepted as a “cost of doing business”, when the number of fraud occurrences grows, so does the total amount of losses for the company.

In cases when the financing is provided by a financial institution, the loss of the vehicle is technically a loss for the bank (which remains the legal owner of the financed vehicle until full payment is received). For this reason, they will often conduct their own investigations in order to recuperate their losses by either trying to locate and recover the vehicle or by holding the dealership accountable for the monetary loss due to negligence on their part.

If the financial institution can demonstrate that the dealership did not take appropriate measures, ignored red flags, did not conduct basic verifications, and behaved without reasonable diligence, then, not only that the dealership may have to pay for the loss, but (if enough of fraud incidents occur) they may lose the relationship with the bank which will no longer be willing to offer financing options for the dealership’s clients due to increased risks.

Even in instances when the dealerships’ insurance will cover the losses, this can result in an increase in premiums and, if the losses continue to mount without any signs of the dealership taking any preventive measures, any future coverage may be refused completely, leading to even more financial losses.

In either scenario, the car dealerships will have to deal with negative consequences associated with those frauds unless they do something about the situation. For this reason, it is beneficial for them to take appropriate preventive measures that will allow them to manage the risks and reduce the number of fraud instances at their locations.

Those measures can only be implemented once the dealerships know what to look for, which can only be achieved after analyzing all available information and identifying patterns and other indicators of fraud. The results of such analysis can then be noted in a database and be available for consultation by the sales staff should the need arise for quick reference material during a transaction (thus reducing risks of fraud and preventing possible losses).

Not only an analysis helps prevent future losses, but the information obtained through such activity can also be used to conduct further investigations that can help track down and locate the vehicles, making it possible to recover them (thus reducing losses even further).

Private Investigators who are familiar with organized car fraud groups and their methods and who are experienced in conducting analysis and fraud investigations, can offer valuable advice to the dealerships, and find information, that will help them implement effective measures to deal with the ongoing (and growing) problem of fraud in the automotive sales industry.