Dealer Danny McKenna is learning to trust his employees again.
Last year McKenna says he discovered that two veteran employees were in collusion and had stolen some $600,000 from him over several years.
"You've got to trust people," says McKenna, owner of McKenna Automotive Group in Norwalk, Calif. "But the people I had had been there a long time and had earned this immense trust. I don't dog-pile all this trust on one person all the time anymore."
Spreading responsibility among several employees is one of the practices McKenna put in place to protect his business from future fraud.
Experts recommend that dealers enact controls to protect their businesses. A 2012 study found the median loss caused by U.S. occupational fraud to be about $140,000. More than one-fifth of these cases caused losses of at least $1 million, according to the Association of Certified Fraud Examiners' 2012 Report to the Nations.
Small businesses, such as some auto dealerships, typically suffer the largest losses because they have fewer anti-fraud controls than their larger counterparts, according to the report. And survey participants estimated the typical organization loses 5 percent of its revenues to fraud each year.
Fraud examiners warn anecdotally that cases of fraud at auto dealerships have been rising in recent years in part because of the 2008-09 recession. But it's hard to measure because many cases go unnoticed or unreported.
Still, nearly every dealership likely is experiencing some level of fraud, examiners say.