Five Tips to Prevent Car Dealers From Getting Conned

Here are crime-prevention tips for car dealership salespeople, F&I managers, sales managers, and the compliance directors who check up on them. The advice comes from Lori Church, director of compliance for Holman Automotive Group, based in Mount Laurel, N.J., outside Philadelphia.

The group runs 31 dealerships across the country. Church offers these tips during an Assn. of Dealership Compliance Officers webinar.

1. When checking up on compliance, check first for violations of the Red Flags Rule aimed at verifying the buyer’s identity.

Violations are fairly common, and potentially costly, Church says. “When we’re handing over the keys, when we’re putting the temporary tags on a car, do we know who that person is? An entire month’s profit could be wiped out by one bad deal.” (Lori Church, left)

Lori Church Headshot

For instance: Is the photo head and shoulders? Face-only? Is there any profile photo? Left profile, or right profile? Are big, toothy grins allowed, or not? Sometimes you can instantly tell something is suspicious by knowing what the rules are in your state. “Also check the signature on the license, against anything the customer has signed. That is the easiest way to spot fraud.” 

3. Check the spelling when double-checking for phony pay stubs and the like.

“It’s amazing how often bad guys are bad at spelling.”

4. Actually look at the documents the customer gives you.

“How often does this happen?: You ask for a document, the customer hands it over, you stick it in the copier machine, make a copy, bang, stick the copy in the deal jacket – without ever once actually looking at the document. Maybe it's a recipe from 1873. But you won't ever notice, if you never look at it.”

5. Compliance directors should ask dealership employees open-ended questions.

“Tell me about your Red Flags program; what’s your role?” is an open-ended question, Church says. That gets a more valuable response than the closed-ended, yes-or-no question, “Do you have a Red Flags program?”