Addressing SA’s automotive threats – information, technology and partnerships are instrumental in winning the battle

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South Africa is known for its high level of vehicle theft but losses to consumers and the industry don’t stop there – the ease with which stolen vehicles are effectively re-registered and re-enter the system perpetuates the cycle. The impact on the automotive industry, and specifically motor dealers, is significant. Access to information and reports that flag dubious deals and individuals, enables a more proactive and consistent approach to closing the obvious security and risk gaps.

The loss to a dealer, should a vehicle be identified as stolen or ‘cloned’ after it has been purchased, is the cost of the vehicle and the opportunity cost - anything from R80,000 to R800,000. Such a vehicle is immediately confiscated and impounded by authorities. This can be avoided by drawing a report on the vehicle and the individual selling the vehicle early in the game.

Reports that have been specially tailored to raise red flags on fraud or potentially fraudulent activities in this sector are inexpensive and easily accessed by dealers or even members of the public. These reports, now available from companies like TransUnion, are comprehensive and canny, drawing on a number of official vehicle, insurance, police, traffic, consumer credit and other databases to crosscheck the credentials of sellers and/or the authenticity of the vehicle. More importantly, they can be accessed very easily and quickly – all it takes is one call or the use of a smartphone app.

Vehicle verification protects against cloning

Vehicles are being cloned with increasing regularity. The fraudster typically makes use of false registration plates from a vehicle of the same make and/or model. The plates may be stolen or simply duplicated. Or, if a vehicle is written off in an accident and its details are left on the system, these may be used for the cloned vehicle. More sophisticated methods also enable fraudsters to change VIN numbers and other identifiers to that of a registered vehicle.

These vehicles may be acquired by a dealer and taken into stock. The ‘cloned’ status of the vehicle is then only discovered when further checks are made by, for example, financing institutions. This could have been avoided with a simple report request to the website or through use of a mobile app.

Proactive checks mitigate auto fraud risk

A basic first line verification report would, for example, check the following:

  • If the features of the vehicle agree with factory specs (e.g., vehicle type and colour, engine size and badging); 
  • If the previous mileage history agrees with what is on the clock;
  • If there is still a financial interest on the vehicle (e.g., an outstanding hire purchase agreement); and
  • If there is a police alert for the vehicle.

The onus is also on the dealer to mitigate the risk of identity fraud, where a vehicle is fraudulently purchased by a bogus buyer with a false ID, or test drive fraud, where the vehicle is literally stolen via the hi-jacking of the vehicle on the test drive.

ID and test drive fraud

There are reports available that comprise very specific checks that can help flush out these criminals. For example, alerts will be raised if the ID number belongs to a new born or a deceased person, if the person is wanted by the police, if the ID number is linked to retail fraud, if the telephone number of the person has been used in other fraudulent activity, or if the person has recently received vehicle finance elsewhere. All of this information is scored using a set of rules, and the resulting score may or may not raise a red flag. A scan of the driver’s license of the potential driver with a smart device will also give the dealer visual clues – i.e., does the photo stored in the licence barcode match the physical person or, indeed, the photo on the presented driver’s licence.

It’s about working together

To drive down automotive fraud in South Africa, dealers have to become more proactive about managing risk. Participating in industry safety initiatives will also help curb fraud in this sector. 

It is important to drive industry participation such as a security alert bulletin. The list should be created from industry information, such as data from the South African Insurance Crime Bureau, as well as information provided by dealers. This can help, for example, if the dealer suspects a vehicle is stolen or risky it can be listed. If the owner tries to resell it, an alert will come up.

Industry partnerships are also instrumental in helping to reduce risk and in the industry.  For example, TransUnion has been involved in the creation of an industry partnership to help reduce risk in the industry as a whole. It shares the vehicle information stored on the TransUnion database via its Vehicle Verifications solution. 

This Vehicle Verifications database was created with the collaboration of vehicle financiers, manufacturers, and finance houses. It is supported by the National Association of Automobile Manufacturers of South Africa (NAAMSA), the Retail Motor Industry and the banking industry.

Ready to get tough on automotive crime? An industry partnership helps reduce risk and protects the industry. All it takes is consistent proactive participation.