Grand theft auto might be a problem for Metro Detroit dealers, but a growing concern among dealers nationally is fraudulent sales that appear like any other transaction.

Vehicle thefts done through identity theft, synthetic identities and similar schemes are on the rise as lucrative fraud opportunities elsewhere dry up and vehicle prices remain robust. Their prevalence has prompted some dealers to hire private investigators, stop selling out of state and take other precautions to ensure buyers are who they say they are. But catching, prosecuting and stopping these kinds of crimes can prove difficult, according to stakeholders.

“It’s nonstop,” said Ralph Sorrentino, vice president of several dealerships in Georgia of the Jim Ellis Automotive Group representing mostly General Motors Co. brands. “In one of my stores, someone tries at least once a quarter, if not more. That’s conservative.”

Sometimes, thieves are successful. Sorrentino said two cars might be stolen through identity theft or a similar way each year. Most of the time, they’re recovered, but they’re not always in the best of shape, with vehicles sometimes being used in crimes or for their parts. One was found as far away as California.

Identity theft is when someone uses another's personal identifying information, such as their name, driver’s license or credit card number, without their permission to commit fraud. A growing crime also is the use of synthetic identities, which may entail fully made-up identities or a hybrid that combines real information like a Social Security number with a fake profile. These sorts of schemes can be elaborate with fake credit history, pay stubs and employers.

Law enforcement jurisdictions also can categorize these crimes in different ways, which makes compiling data on them difficult. Several dealers told The Detroit News they don’t contact police if they suspect an attempt at a vehicle theft through these means.

The Michigan Automobile Dealers Association doesn't collect statewide data on these incidents.

Walt Tutak, dealer trade inventory manager of Champion Hargreaves Chevrolet in Royal Oak, Michigan, said the dealership has software that helps to flag repeat offenders: "If you don’t do your due diligence, you can get it wrong," he noted.

Detroit in 2023 had the eighth largest growth in synthetic identity fraud, increasing by 57%, with No. 1 Memphis, Tennessee, at 127%, according to the most recent auto lending fraud trends report from Point Predictive.

The California-based software company is focused on preventing fraud; Stellantis NV’s financial services team recommends Point Predictive to its dealers who are concerned about this issue. Point Predictive estimated that in 2023, auto lenders experienced $7.9 billion in losses from fraud and material misrepresentation. That was slightly down from 2022, in line with a decrease in loan origination volumes. The overall rate of loan applications that contained evidence of fraud and misrepresentation, however, increased 6% year-over-year.

Early indications show the frequency increased again in 2024, said Frank McKenna, Point Predictive’s co-founder and chief fraud strategist.

“Dealers are just kind of getting hit left and right,” he said. “COVID was training wheels for these fraudsters.”

With more people on furlough, laid off or with additional time on their hands, conversations on social media increased around defrauding stimulus programs like the Paycheck Protection Program and increased unemployment benefits, McKenna said. Once the funds dried up for these programs, some turned to check fraud and falsified purchases.

Vehicles were a natural target. Auto lenders are the most targeted industry for synthetic identity fraud, according to consumer credit reporting agency TransUnion. Pandemic-induced shutdowns and microchip shortages depleted inventories on dealer lots, sending payments often above the manufacturer’s suggested retail price. Average transaction prices haven’t receded, reaching $48,273 in November, up 1.5% year-over-year, according to Kelley Blue Book. The rate of online vehicle purchases also increased.

General Motors Co. spokesperson Sabin Blake said in an email that the company hasn't noticed a particular uptick in activity. The Detroit automaker, for its digital retail platform, has customers, prior to signing electronically any documents, answer a series of multiple choice questions like "What street did you live on in 1997?” to confirm their identity.

The company also encourages its retailers to know their customers and do credit checks, and provides guidance in its sales and incentive manual, like comparing signatures, ensuring checks are from the same bank and account, and searching a customer's phone number online to see if the name and address match.

The News did not receive a response to an inquiry left with a representative at Ford Motor Co. about its efforts to combat fraudulent vehicle purchases.

A thief may use the vehicle, sell it or export it overseas. It can take weeks or even months before a lender or dealer realizes they’ve been the victim of a crime once the fraudster starts missing payments. Many contracts between lenders and dealers put the cost on dealers in these cases, which can increase their insurance rates and make it more difficult to offer competitive pricing to customers.

“What happens with the dealers when they have a fraud is they get flagged,” McKenna said. “They’re labeled an easy mark by these fraud rings. They’ll come back again and again for a few weeks and see how many they can get. By the time the dealer realizes, it might have been 10-15 cars, which means they’re really going to have a bad year.”

The three vehicles with the highest fraud rate in 2023 were the Range Rover Velar, Ram 3500 Crew Cab and Jaguar F-Pace, according to Point Predictive.

Every three or four months, David Kelleher, owner of a Chrysler Dodge Jeep Ram dealership in Glen Mills, Pennsylvania, said one of his salespeople will bring a potential sale to him with some concerns. The dealership runs credit checks and works with its bank partners on employment and other verifications.

Some of the flagged transactions just need some small additions, but for others, the retailer will ask for extra documents, and the store might never see the buyer again. In the past three years, Kelleher said, two vehicles were stolen by these kinds of schemes. The Dodge Charger and Challenger muscle cars, the Ram1500 TRX truck and other vehicles upward of $70,000 were the main targets.

“No one tries to steal a (Jeep) Compass,” Kelleher said.

Not everyone using these schemes intends to steal, though, McKenna added. Sometimes, synthetic identities are advertised as ways in which someone can rebuild their credit by paying just a few hundred dollars.

Creating a fake identity or stealing someone else’s to make a purchase, though, is illegal. But especially in the cases of synthetic identities, not having someone to confirm it was their information used to make or attempt a fraudulent purchase can make a harder case, said Sgt. Darren Schlosser, who supervises the Houston Police Department’s vehicle fraud unit in Texas. He does training on fraud for law enforcement and dealers across the country.

There also isn’t a straightforward way for law enforcement, dealers, auto lenders and insurance companies to cross-check their information that might be relevant to a case like this, Schlosser said. That’s easing, though, as this issue grows.

“We’re seeing a lot of collaboration and cooperation between finance companies and law enforcement,” he said, “because the losses are so staggering that the finance companies have made it a lot easier to obtain what we need when we need it.”

The cases also can be complicated in that they may involve multiple law enforcement jurisdictions based on where the dealership that sold the vehicle is, where the vehicle was found, where the suspect lives and where an individual whose identity may have been stolen lives, Schlosser said.

Adding to that, the growth in these cases comes after a national discourse around police brutality and funding following the death of Minneapolis man George Floyd in 2020 amid the pandemic. A few dealers told The News they felt their law enforcement agencies don’t have the resources needed to investigate auto thefts thoroughly,

Schlosser said large departments often have dedicated auto theft units, and Houston is hiring two more detectives for the vehicle fraud unit in response to the need. But smaller departments may have only one or two detectives to do everything.

“There are a lot of issues,” he said, “with getting caught up with the times and knowing how to address what actually is happening out there.”

Schlosser recommends, particularly for out-of-state deliveries, that dealers require buyers to send a photo of themselves holding their driver’s license, have a video-conference conversation with them about their decision to purchase from a remote dealer and explain the paperwork, and choose a transport company delivering the vehicle that won’t allow for a last-minute change in destination address and will verify the identification of the buyer and take a photo of the buyer picking up the vehicle.

Sorrentino, at the dealerships in Georgia, said the group started five years ago to work with a private investigator on bounced checks and fraud. It also works closely with local law enforcement and has had people who have tried to make purchases with stolen identities walk out of the dealership in handcuffs.

One resource to which Sorrentino said he wishes he had access is a system to look up the original photo taken at the state’s Motor Vehicle Department to compare to the license provided by a buyer. Working with a private investigator can help with that.

“Fraud is a real thing,” Sorrentino said, “and the dealerships that don’t train on it lose cars all the time.”

These types of theft events happen more frequently than Randy Dye, owner of a CDJR dealership in Daytona, Florida, says he would’ve thought. Although he hasn’t had a vehicle stolen this way, there have been a few near misses as the sophistication of attempts has increased, and the dealership has had to install improved protocols to protect itself.

“You have to have a culture inside the company,” Dye said. “Your team wants to sell a car. That’s what they’re here for. When you’re having to defend against doing that, it’s sort of counterintuitive. But there are worse things than not selling a car, like selling a car and not getting paid.”

The dealership will do research in cases of out-of-state buyers to ensure that another closer dealer doesn’t have the same vehicle, for example. One of the biggest steps Dye has taken for out-of-state purchases is hiring a third-party verification notary to meet with buyers in a public place to verify the buyers are who they say they are and to notarize transaction documents. Only once the paperwork is processed and the funds have been transferred, he said, will the vehicle be shipped.

Point Predictive works with hundreds of dealers and roughly 50 major lenders to review 4 million auto loan applications each month, McKenna said. With its datasets that include 250 million previous applications and 13,000 frequent synthetic identity fraudsters and fake employers, McKenna said the company's software can flag 90% of otherwise missed frauds.

“You have to give some training to spot fraud to sales and finance people,” he said. “If you haven’t gotten hit, you’re going to.”

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