Fraud Is Surging in Dealerships — But It’s Also More Preventable Than Ever

Recent data shared in Market Pulse by Car Dealership Guy, drawing from eLEND and Experian Automotive research, paints a clear picture: fraud attempts at dealerships are rising fast, and the financial impact is growing with it.

But here’s the important part: This trend doesn’t mean fraud is inevitable. In fact, the data shows that early identity verification dramatically reduces fraud losses, often stopping bad actors before a deal even begins.

What the Industry Is Seeing

According to surveys and interviews highlighted by Car Dealership Guy:

• 77% of dealers say fraud activity has increased over the past 24 months
• 48% report losing 4+ vehicles to identity fraud in the last 2 years
• 24% have lost 10+ vehicles
• Each fraudulent transaction typically results in $10,000–$20,000 in losses

This isn’t just financial leakage. It’s lost inventory, lost time, lender friction, and increased exposure across departments.

The Breakthrough Insight: Timing Changes Everything

One of the most important findings from eLEND and Experian is that when identity verification happens early, fraud attempts often stop immediately.

Fraudsters actively test dealerships for friction. If verification is introduced late, typically inside F&I, bad actors are more likely to push forward. But when ID authentication happens upfront, nearly half abandon the transaction right away.

Early friction prevents late-stage losses.

Why Sales Must Own the First Line of Defense

Traditionally, fraud has been treated as an F&I problem. But today’s fraud environment demands a front-line approach:

• Sales initiates early identity verification
• Data checks validate income, employment, and trade details
• F&I completes cleaner, lower-risk deals

This relay-style approach ensures fraud doesn’t stack — and that F&I isn’t left inheriting risk that could have been eliminated earlier.

Where Fraud Prevention Often Breaks Down

Even with fraud tools in place, many losses happen due to:

• Inconsistent execution: When ID checks aren’t used every time, both online and in-store, fraudsters quickly learn which stores are easier targets.
• Manager overrides: When red flags are dismissed to “keep the deal moving,” dealerships unintentionally open the door to large losses.

The most effective fraud prevention strategies rely on consistent process, not discretion.

How Gather Helps Dealers Stop Fraud Early

Gather was built specifically to solve this problem. Our platform allows dealerships to verify buyer identity and insurance in one fast, customer-friendly flow — right at the start of the deal.

With Gather, dealers can:

• Stop fraud attempts before test drives, credit pulls, and paperwork
• Eliminate stacked fraud that surfaces late in F&I
• Protect inventory, lender relationships, and dealership reputation

By moving identity and insurance verification to the front of the process, fraud becomes far easier to prevent — not absorb.

Final Thought

Fraud may be rising across the industry, but losses don’t have to rise with it. Dealerships that verify identity early, remove discretion, and standardize their process are proving that fraud prevention is no longer reactive — it’s operational.