BE CAREFUL WITH OUT-OF-STATE DELIVERIES AS MANY RISKS APPLY

The Internet has become a way of life in selling vehicles.  It enables customers to contact dealers and obtain information more readily and can be a source of selling.  But it comes with real dangers of identity fraud that can leave a dealer required to repurchase an agreement and with little, if any, hope of recovering the vehicle.
 
Since 2010, Customs Agents have seized over 3,500 stolen vehicles in U.S. ports bound for other countries. Many of those cars were headed to Africa or Eastern Europe, or other areas where they can be sold for great profit.  The vast majority of these vehicles were stolen by financial identity fraud perpetrated on dealers who delivered the vehicles to an out-of-state identity thief.
 
Dr. Stephen Coggeshall, ID Analytics’ chief analytics and science officer and a respected identity theft expert, described the problem of identity fraud with out-of-state deliveries as follows:
 
“Any transaction that takes place in a faceless environment online has a lot higher potential for fraudsters for a number of reasons. It’s much easier to misrepresent yourself — who you are — in a faceless transaction. But also, the odds of you getting caught are a lot smaller. You’re not physically at a dealership.”
 
A Red Flags program will have difficulty identifying the theft due to the effectiveness of “synthetic” identity theft.  A fraudster creates a synthetic identity by making up a Social Security number (since 2011, Social Security numbers are no longer linked to states of residence but are issued randomly), adds false personally identifying information to it and establishes a credit file. 
 
Dr. Coggeshall says that using synthetic identities is now “the dominant mode of identity fraud,” overtaking other methods like identity theft and identity manipulation.  Particularly when it comes to remote auto fraud.

Synthetic identities are incredibly difficult to trace, because they don’t lead back to a real person. Fraudsters use a combination of elements such as a fabricated Social Security number, name, date of birth, address or phone number, and then establish that identity by applying for credit cards or a cellphone.  Credit bureaus establish upwards of 40 people on the same Social Security number.

“It’s actually not that hard to establish the validity of a synthetic identity,” Dr. Coggeshall says. “And once you’ve done that, you can start doing all sorts of things.”  Hence the rise in motor vehicle identity fraud.  Every time you ship a vehicle out of state instead of making the customer come to the dealership, you run the risk of that person being an identity thief waiting to ship the vehicle overseas or sell it to a chop shop.  It doesn’t take more than a few of those transactions to negatively impact your bottom line.

In a related sense, straw purchases are also more readily accomplished via out of state shipments to Internet sales.  These lead to repurchase requests too.

Out-of-state deliveries produce practical issues as well.  Titling vehicles can become problematic if you are not familiar with the idiosyncrasies of the remote state’s title office and you don’t want dealer plates in far-away locations.  Disputes with the buyer may inadvertently wind up being litigated or arbitrated in the buyer’s home state as well, even if your Buyer’s Order says otherwise.  Obviously, repossession rights upon default will be subject to a group of laws and requirements different from those in your state.  “Home town”: justice could easily come into play in the buyer’s favor in any dispute.
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Do enough deliveries into the remote state and their tax authorities might claim you are “doing business” there and want to tax you.  This is another risk.