Don’t get burned by these three common types of auto fraud

| Feb 1, 2021 | Auto Dealer Fraud

Studies show that around 1 in 10 property/casualty insurance claims are fraudulent. In fact, insurance fraud is close behind tax evasion amongst some of the most pervasive white-collar crimes. This means that the likelihood of experiencing the outcome of such fraud is relatively high when buying a used car. 

The state of modern insurance

Most insurance companies have specialized investigative units tasked with analyzing fraud claims. Training and public awareness are integral to preventing future fraud, but the fact of the matter is that if you’re buying a used car, you may not have all the tools you need to look into a dealer, seller or the vehicle being transferred. Here are some of the most common circumstances that used car buyers may find themselves in:

Falsified theftVehicle theft fraud is a fairly common scheme in which a person pretends that a car had been stolen to yield an insurance claim. The vehicle will then be ‘found’ after the claim is collected or the owner sells off the car via an alternative means. The fraudster may then sell the vehicle to a prospective buyer. 

Auto repair fraud: Airbag fraud represents a significant risk for people seeking repairs from an auto repair business. In some cases, a repair person replaces a non-deployed airbag with a deployed one. The cost of a replacement is applied as the original is merely replaced. Other scenarios might involve damaging an airbag to replace it with a black market version for a significant profit margin. Auto shops may deceive insurance companies through fraudulent or unnecessary collision repairs. 

Cloned vehicle: A cloned vehicle is one that was stolen and given falsified or counterfeit documentation. This often involves taking the vehicle identification number (VIN) from a legally owned vehicle and applying it to a stolen one. This practice is more likely to occur across state and international boundaries as state agencies are less likely to check other states or countries for duplicate ownership.

Protecting the integrity of consumer purchases

If an auto seller misled you, you want to protect the money you spent for that property. Often consumers can’t recognize the signs of fraud until consulting with someone specialized in auto dealer/seller fraud. Make sure you get the vehicle you paid for.