Consumer fraud continues to rise, as evidenced by two men who were arrested this week for producing fraudulent documents to finance the purchase of motorcycles from three dealerships in Long Island, N.Y.
One of the men produced a fraudulent license and a fraudulent credit card to obtain a loan, to purchase a 2017 Yamaha ATV, valued at $9,299, and a 2017 Yamaha motorcycle valued at $2,299, according to a published report.
On a separate occasion, the same man obtained a loan using fraudulent documents and purchased a 2017 Yamaha motorcycle valued at $8,699.
Additionally, another man attempted to use fraudulent documents to obtain a loan, but the application was denied when the dealer questioned the documents, according to the report.
“You are not in this business of lending money in powersports or auto without getting stung by fraud,” Tom Collins, executive vice president and managing director at FreedomRoad Financial, told Powersports Finance. “It’s just the nature of the business. Just like you will have repos, you will not jump in and expect to not have it. That’s something that is understood, but you want to minimize it.”
To that end, FreedomRoad Financial coached its dealers on red flags and what to look for when dealing with fraudulent activity in its most recent quarterly newsletter, Collins said. “We do try to work with our dealers, to let them know we are in this together,” he said. “They can’t be complacent in this. [Ultimately] it hurts the dealer; they may be thinking short term, but long term it hurts business.”
Consumer fraud is on the rise, compared to a year ago, several lenders told Powersports Finance, and the primary line of defense is the dealers.
In an effort to ensure dealers are doing their due diligence, it’s up to the lender to ramp up training efforts and work with the dealers to resolve any issues, said Emre Ucer, managing partner at MotoLease.
“We review our numbers on a weekly, monthly, and quarterly basis with regard to look-to-book, the performance of dealers, and losses associated with the dealer,” added Donal Hummer Jr., chief executive and founder of ThunderRoad Financial. “Those types of things are all done on a regular basis. If you can do that, then you can start seeing trends that could potentially be dealer related or regional related,” as sometimes these fraud rings — a large group of fraudsters applying for financing at once — can end up attacking certain areas of the country.
“You want to do things to protect yourself,” Collins added. “You want dealers to look out for you and be a partner in helping to stop it, it’s going to happen and it could get really ugly if you get stuck in a fraud ring and multiple units are gone.”