Dealers and lenders are getting stung by a new type of used-vehicle sales fraud that takes advantage of lenders' automated payoff systems, the CEO of a Florida reseller warns.
A ring of well-organized criminals has developed a modern-day version of kiting checks and title fraud to sell dealers high-end used vehicles that have been fraudulently obtained, says Mark Maida, CEO of AutoBuy, of West Palm Beach, Fla. The company buys vehicles from consumers and resells them directly to dealerships and via auctions.
Maida said his company got burned once in 2016, and he's heard from other dealers and lenders who are encountering similar cases of fraud throughout Florida.
"They take advantage of lenders' automated phone-in payment systems," Maida told Automotive News. "The systems automatically record payments as made before the checks actually clear. By the time the lender knows the payment wasn't actually made, the crooks have cashed the dealer's payoff check and disappeared."