How Walser training program helps dealership staff catch scammers

Walser Automotive Group instituted an antifraud training regimen for sales and finance personnel in 2021 after recognizing the opportunity remote deals offered scammers and finding itself fooled by fraudsters as well.

The training has led to the group spotting multiple scammers, according to Walser Senior Director of Finance Jennifer Parsons, who spearheaded the antifraud effort. She said it's benefited the group's lender relationships by giving institutions confidence in the deals Walser submits.

Parsons said Walser recognized fraud as an issue in mid-2020 after the COVID-19 pandemic prompted interest in car deals involving remote deliveries and fully digital interactions with customers. Walser, of Edina, Minn., ranks No. 28 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 23,346 new vehicles (and 29,237 used vehicles) in 2022.

"We saw the writing on the wall that, 'Hey, this is going to continue being a big problem,' " Parsons said.

Walser was right. Fraud prevention provider Point Predictive, which collects data from a consortium of lenders, flagged more than 16,600 suspicious auto loan applications industrywide in 2021 — up 260 percent from 2020. It recorded more than 18,000 potentially fraudulent applications in 2022, up more than 8 percent.

And three-fourths of auto lenders surveyed in December 2022 and January 2023 by Point Predictive thought fraud would be a larger problem in 2023 than 2022.

Income misrepresentation and synthetic identities were the top two issues on lenders' minds, and more than half of lenders estimated at least 5 percent of the pay stubs they saw were fradulent, according to Point Predictive.

Walser has found phony pay stubs and fraudulent identities to be common scams, Parsons said. The Walser group had been burned by both types of fraud before launching its training.

"On a fairly regular basis we were getting something related to pay or proof of income that was a problem," Parsons said.

Such incidents lead to "the worst call that you ever have to make" as a retailer — telling a customer they need to bring back the vehicle.

Walser also had lost a luxury vehicle that had been sent out of state to a consumer who turned out to be using a stolen identity in the loan application.

"It was just a lack of education around it," Parsons said of that transaction.

"And so, we overcorrected."

Parsons worked with the group's learning and development and risk and safety teams to develop a half-day training course for managers and Walser's centralized finance desk. This widespread training meant "everybody was looking out for each other's back," she said. Sales personnel receive an abbreviated form of fraud training as well.

The curriculum drew upon both internal Walser knowledge and input from partner lenders about what red flags dealers might see. Nonprime lenders are particularly supportive of education and very willing to share tips, Parsons noted.

"We bootstrapped it," she said.

The program has resonated with employees, Parsons said.

"It's actually my favorite training to do," she said.

She said graduates of the course have contacted her with reports of possible fraud: "'I think we've got this based on this, this and this from the training.'"

In the first four months of 2022, Walser employees recognized and prevented 37 fraud attempts, saving the company more than $1 million in potential losses, Parsons said.

Walser would have caught some of these fraudsters even without the training, Parsons acknowledged.

"But I do think a good portion of them would not have gotten caught because how smart fraudsters got in the period of time during COVID," she said.

Fraudsters looking to steal a car using a different identity demonstrate certain patterns, Parsons said. These include self-employment, ostensibly extremely good credit, a desire to buy luxury vehicles, living out of state and seeking an entirely remote deal. They come off as "really easy customers" who "want to buy everything" offered on the finance-and-insurance front but hope to put no money down.

"Those were some of the biggest flags," she said.

Someone with those red flags could be a legitimate customer so "you have to be careful," Parsons said. The dealership will look for other telltale signs such as an altered driver's license or use identity verification questions. They avoid offending legitimate customers by explaining that the dealership is trying to protect them from identity theft.

"A legitimate customer will appreciate that," Parsons said.

Parsons estimated Walser had encountered more than 100 fraudulent pay stubs in the past year and a half. When a staffer spots something suspicious, such as a typo or the document's formatting, the dealer will ask the customer to provide a copy of a bank statement confirming the payment was deposited into the account.

Legitimate customers don't mind providing the verification, but for fraudsters, "generally, we just don't hear from that customer moving forward."

Though one flagged customer produced his bank statement — which contained records of unemployment checks instead of income from the job he purportedly had, Parsons said. She called it a "scratch your head" scenario.

She wondered, "'Did you think this was going to work?'"