Everything seems on the level when a well-dressed man walks into a dealership and shows interest in buying a pricy Chevrolet Corvette.
He does a demo drive. His credit is good. If there is a red flag, it is that he wants to negotiate a very low down payment.
Then he takes delivery of the car, drives away and is never heard from again. And, of course, did not pay another cent for the $90,000 ride. Score one for an identity thief.
“The car just went away,” says Sanjiv Yajnik, Capital One’s president - financial services - who offers the cautionary tale while touting his company’s new fraud-prevention tool offering for dealers. “Think of property driving away, disappearing.”
The new product is ProtectID, a real-time fraud detection tool embedded in Capital One’s Dealer Navigator platform.
ProtectID runs behind the scenes of dealers’ Content Management Systems, using Capital One’s proprietary fraud models and deep data network, as well as artificial intelligence and machine learning to flag potential risks at the credit application stage, before funding occurs and certainly before a con artist drives a car off the lot.
Fraud is one of the major challenges facing auto retail today, and it’s accelerating. It’s up 16% over last year, says Yajnik. “We need to get in front of it, but it is a hard problem to tackle.”
Synthetic identities, credit washing and income misrepresentation now account for nearly 70% of total auto-fraud risk, costing the auto industry billions each year, reports Capital One.
Fortunes O'Neal, general manager of GM Central Kia of Plano (TX), calls ProtectID a game changer.
"It not only enhances my team's judgment but also instills confidence in them when selling cars,” he says. “The verification process is entirely digital, 100% self-serviceable and incredibly quick."
As a finance giant, Capital One has more than 100 million bank accounts and credit card customers.
The company maps all transactions in a way that detects ones that are bona fide and ones that raise eyebrows. “We’re seeing fraud rings operating globally,” Yajnik says during an online media presentation.
Here’s how the new fraud-fighting system works:
When a dealer submits an application to a lender or lending network, such as RouteOne, ProtectID initiates a “soft” pull and evaluates the application for risk, flagging suspicious activity in real-time.
Dealers are alerted to suspicious activity through notifications within the Dealer Navigator platform, as well as text messages and emails.
The tool outlines what information on the application is deemed a risk and provides steps to move forward, including speaking to a Capital One agent.
If an application is flagged, the applicant is flagged too, receiving a secure verification link to confirm identity. This includes phone-number validation and government ID upload. The applicant is asked to take a selfie, which is uploaded and compared to government ID photos in databases.
“In a nutshell, the customer gives information, it goes in the AI machine, which alerts the dealer if the information is determined to be (suspicious),” Yajnik says.
That’s what Dylan Bullock, general sales manager at Grapevine Dodge in Texas, likes about it.
“We didn’t have to change our (selling and financing) process, and it has been super easy to use,” says Bullock, who acted as a consultant for developing the digital fighting tool. “Multiple levels of verification can be done. We’re not dealing with fraud at the dealership every day, but Capital One is.”
Each manager in the 32 Grapevine stores notifies the others about fraud attempts because a fraudster “usually is not going to stop at one dealership,” he says.
Bullock recalls that the new anti-fraud system recently quashed a deal at his store because of suspected identity theft.
“The tool stopped the deal,” he says. “The day later, we got a call from the person whose identity was stolen. We told them we stopped the deal and reported it to the authorities. They were so grateful.”
