Preventing identity theft: What's (not) in your wallet?
The race is on between identity thieves who try to buy cars fraudulently and the companies that come up with software designed to catch them.
Prompting so-called out-of-wallet questions for F&I managers to ask customers is a key way theft-deterrent software works, according to DealerTrack and Reynolds and Reynolds.
Both vendors sell programs to help dealerships verify a customer's identity and comply with the Federal Trade Commission's Red Flags Rule and other regulations.
Out-of-wallet questions get their name because the answers are things an identity thief can't get by simply memorizing the contents of a stolen wallet or an improperly accessed credit report.
"Which one of these five people do you know?" could be an example of such a question, said Randy Henrick, associate general counsel for DealerTrack Inc. of Lake Success, N.Y. "One of them is the person's brother-in-law."
Hold your horses
This spring, out-of-wallet questions were one way a Ford dealership in Waterville Township, Ohio, became suspicious of Justas Laugalis, 26. Laugalis, who was convicted of forgery in connection with the case, had a stack of identities and dealership business cards when he was arrested, according to police.
Police say at least four other dealerships sold Laugalis cars based on false information, and Laugalis told police he resold one of the cars for $500 cash, according to police reports.
Dealerships can't let the natural desire to close the deal get the better of them, said Jon Strawsburg, vice president of product planning for Reynolds and Reynolds in Dayton, Ohio.
"One thing dealerships contributed to those events happening is they wanted to sell a car ... as opposed to thinking about the security of the credit company," he said.
Dealership F&I vendors such as DealerTrack and Reynolds and Reynolds rely on giant databases of customer information. Some data are based on government records. Private firms that specialize in customer data compile some of the records, say Strawsburg and Henrick.
The idea is to come up with information that average customers would know off the top of their heads but an identity thief would be hard-pressed to find -- such as who the seller was the last time the customer bought a house, based on deed registrations.
In separate interviews, the two experts said some customer data can be checked out quietly without the F&I manager having to ask the customer any probing questions.
For instance, there's a registry of Social Security numbers corresponding to people who have died, Strawsburg said.
"You could ask somebody, 'May I see your Social Security number?'" he said. "If the number appears to show that person isn't alive anymore, they probably shouldn't be standing in front of you."
You can reach Jim Henry at email@example.com.