What Auto Dealers Need to Know About Synthetic Identity Fraud

April 18, 2024

Team ACV




What Auto Dealers Need to Know About Synthetic Identity Fraud

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An image of a Drivers License being used for Synthetic Identity Fraud

Any company that handles customer data and processes financial transactions must be aware of fraud threats. These threats are always evolving, and synthetic identity fraud is one recent development that’s devastating lenders across the country. 

Learn what synthetic identity fraud is and how to protect your dealership from this rising threat. 

What Is Synthetic Identity Fraud?

Synthetic identity fraud is when fraudsters steal a real person’s legitimate information and combine it with fabricated details to create a fake identity. For example, they might use a stolen Social Security Number (SSN) and combine it with a fake name, phone number, and address to fabricate an identity. 

It’s more challenging to detect synthetic identity fraud than traditional identity theft. While some of the personal details will be real and match an actual person, the overall identity is still false. 

How Do Fraudsters Collect Data for Synthetic Identity Theft?

Like traditional identity theft, synthetic identity theft requires fraudsters to obtain at least one piece of legitimate personal data. They may either steal people’s SSNs or purchase stolen SSNs from other data thieves. Common targets of SSN fraud include older adults, children, and homeless people since they’re less likely to notice identity theft¹. 

It’s also possible for fraudsters to obtain several pieces of personally identifiable information and adjust them slightly to create a new identity. This is called identity manipulation. 

How Fraudsters Use Synthetic Identities

Typically, criminals use synthetic identities to commit financial fraud. They apply for loans, credit cards, and bank accounts through these fake identities. Sometimes, they may also use the identities to access unemployment benefits or medical care¹. 

How Does Synthetic Identity Fraud Affect Dealerships?

Synthetic identity fraud can affect any financial institution or lender, but dealerships are some of the top targets for fraudsters. From 2022 to 2023, synthetic identity exposure among U.S. auto lenders increased 38%, reaching a total of $1.8 billion². 

Criminals having greater access to synthetic identities is only one part of this growth. Another part, according to Jason Lord, vice president of product marketing for fraud and identity solutions at TransUnion, is the growth of online car purchasing and financing³. High resale value for vehicles may also drive more synthetic identity fraud at dealerships. 

A fraudster will use their synthetic identity to apply for an auto loan from a dealership. If the dealership F&I department overlooks the fraud, they will approve the loan, and the criminal will get the vehicle. These criminals will never pay back the loans, and because the information is fraudulent, there’s little hope of tracking them down for the money. The average loss per account affected by synthetic identity fraud is $10,000, but with vehicle loans, this number can go much higher⁴. 

Dealerships also have to worry about criminals stealing their customers’ personal data to use in synthetic identity scams. 

How to Detect Fraud & Protect Consumer Data

Luckily, there are ways to protect your dealership from fraud and consumer data theft. Implement these strategies:

  • Use identity document authentication software: This software will detect altered, expired, or forged IDs, helping you catch fraudsters without valid IDs.
  • Do your due diligence to verify employment and income: Contacting employers and other institutions that shoppers include in their loan applications goes a long way. Verify loan application details with external parties to ensure accuracy. 
  • Cross-reference identities across databases: Use identity verification software to find matching customer records.

Some dealership owners hesitate to add steps to the financing sales process, worrying that friction will prevent sales. However, incorporating a few extra steps to detect fraud and verify identities can protect your dealership from incredibly damaging fraud attempts. It’s worth it. 

Protect Your Dealership From Fraud

You do everything in your power to ensure your dealership’s success. Don’t let fraudsters take advantage of gaps in your data protection and loan verification processes. 

ACV Auctions can help you source the best vehicles for your dealership in less time, so you can focus on strengthening your business and building customer relationships. Get started today and enjoy transparent reporting and straightforward bidding on quality used vehicles. 



  1. What Is Synthetic Identity Theft? Equifax. Retrieved March 28, 2024, from https://www.equifax.com/personal/education/identity-theft/articles/-/learn/synthetic-identity-theft/ 
  2. TransUnion Analysis Finds Synthetic Identity Fraud Growing to Record Levels. TransUnion. Retrieved March 28, 2024, from https://newsroom.transunion.com/transunion-analysis-finds-synthetic-identity-fraud-growing-to-record-levels/ 
  3. Betterton, R. (18 September 2023). How fraudsters are using fake identities to get auto loans. Bankrate. Retrieved March 28, 2024, from https://www.bankrate.com/loans/auto-loans/auto-loan-fraud-rising/ 
  4. Larson, G. (8 October 2019). Synthetic Identity Fraud Is The Fastest Growing Financial Crime—What Can Banks Do To Fight It? Forbes. Retrieved March 28, 2024, from https://www.forbes.com/sites/forbestechcouncil/2019/10/08/synthetic-identity-fraud-is-the-fastest-growing-financial-crime-what-can-banks-do-to-fight-it