Skip navigation
Fraud.jpg Getty Images
Experts say auto insurance fraud growing at alarming rate.

New Offering Aims to Reduce Auto Insurance Fraud

New tool allows dealers to speed reliable verifications.

Dealers have a new tool to speed insurance verification and combat fraud.

Cox Automotive has partnered with insurance verification platform Canopy Connect on a new venture that embeds insurance verification and servicing capabilities into Cox’s E-Commerce solution. The state-of-the-art automation and AI capabilities are expected to increase efficiency and combat fraud.

“We set out to build an end-to-end online car buying platform and knew that insurance verification was a key part of the F&I process that was missing,” says Paulo da Silva, vice president of operations for e-commerce at Cox Automotive. “We worked with Canopy Connect’s technology and team to bridge that step so our dealer partners can create a trusted and comfortable environment for online transactions with their consumers.”   

As we previously reported, auto fraud is growing at what experts call an alarming rate. Cox’s new platform is the latest tool to address the issue. A key focus for fraudsters centers on new-account fraud, including fake and synthetic identities built with real data and fabricated information.

The following data from the just-released 2024 Auto Lending Fraud Trends Report from Point Predictive, an AI technology company that offers services including automotive fraud solutions, offers more insights into the issue. Findings include:
 

  • An estimated fraud loss exposure of over $7.9 billion to the auto industry.
  • A 98% growth in synthetic identity attempts, signaling a significant shift in fraud tactics.
  • A 30% increase in credit washing (in which people claim to be victims of identity theft to “wash” negative credit from their records), driven by illicit credit repair activities.

Experian, a data analytics and consumer credit reporting company, reports identity fraud committed against auto dealerships has grown as more dealerships rely on digital retail. U.S. dealers process identification verification for about 70% of shoppers, reports Cox Automotive Ecommerce Platform Analytics. The partnership with Canopy Connects should speed reliable verifications, reports Cox.

The FTC reports fraud accounts for about 80,000 U.S. car thefts in 2023, although the figures aren’t categorized, a portion is from fraud committed against dealerships.

Some consumers cite rising insurance rates as the reason they avoid car shopping. The increase is due, in part, to auto insurance fraud committed against dealers. That means dealers are losing both money and sales due to fraud.

MarketWatch reports the average U.S. car insurance policy (and resulting premium) increased 19.2% between 2022 and 2023, and premiums are unlikely to drop in 2024.

 

TAGS: F & I
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish