Dealerships face increasingly sophisticated fraud schemes that put customers’ information at risk. Adding to the challenge, the FTC’s Safeguards Rule raises the stakes, requiring dealerships to adopt security measures to strengthen their financial data.
A new strategic integration between two software platforms – Informativ and ComplyAuto – can –now help dealers prevent fraud and catch compliance errors that might slow a deal closing.
Strengthening Compliance and Fraud Protection
Under the Safeguards Rule, dealers must implement physical, administrative and technical protections to policies, platforms and processes to protect customer information, explains Doug Fusco, managing partner, dealer compliance at Informativ, a compliance technology provider that recently partnered with compliance solutions platform ComplyAuto.
Informativ digitally gathers all the compliance information required when a dealership sells a vehicle, including validating and instantly verifying the buyer’s driver’s license or other form of identification to prevent fraud.
ComplyAuto will now be embedded in Informativ’s platform.
“We handle the administrative (requirements) and Comply handles the technical (requirements),” Fusco says.
A Rising Threat: Fraudulent IDs on the Rise
The number of fraudulent IDs is growing rapidly, Fusco says.
Between early 2023 and December 2024, Informativ flagged 11,000 fraudulent IDs, he says, and “the trajectory is only getting worse.”
Scott Kunes, chief operating officer of Kunes Auto Group, with auto franchise locations in Iowa, Wisconsin and Illinois, says his group sees firsthand how fraudsters are becoming more sophisticated.
“There are a lot of different ways these criminals are coming in and trying to take advantage of us,” Kunes says during a “How Top Dealers are Crushing Fraud” panel at the recent NADA Show. “It was very important for us to find a solution we could integrate easily.”
Kunes uses Informativ’s software to help prevent fraud and streamline compliance processes
Keeping Customers Happy
A customer who has to return to the dealership to sign a document is an unhappy and unsatisfied customer. That hurts business. The speedier the sales process, the more likely a customer is to recommend a dealership.
The 2024 CDK Friction Points Study found that a dealership’s Net Promoter Score – a measure of customer loyalty – drops by 10 points if a customer’s wait time exceeds one hour.
To prevent such delays, ComplyAuto’s DealCheck AI uses artificial intelligence to ensure every document is present and correctly filled out.
That AI engine is now embedded in the Informativ platform and checks the digital documents in the deal jacket for any errors.
“At the time of delivery, (the Informativ software will) run all the paperwork through that engine, and do in 60 seconds what used to be done after the fact and take hours to do,” Fusco says.
If ComplyAuto detects a missed signature, for example, that can be corrected while the customer is still in the F&I office.
For large dealership groups such as Kunes, which operates 40 rooftops, mistakes are “inevitable,” and catching them upfront is critical, Kunes says. “If we can check these details before a customer leaves, it is imperative.”
No More Kicked Deals
Missing signatures or fraudulent information can also cause a deal to be kicked, that is, rejected by a lender. That delays financing and costs the dealership revenue.
Every deal at Toyota of Cedar Park, TX, has a checklist before it goes upstairs to the accounting office, dealership general manager Rigoberto Guevara says, “but still my desk managers are missing one, two (or)three forms.”
A kicked deal means lost income, so being able to check for any problem quickly “is a game changer,” says Informativ/Comply Auto client Guevara, who was also a “How Top Dealers are Crushing Fraud” panelist.
“I see the dollar signs everywhere” in the kicked deals process, he says.
