Automotive News Features Informativ’s Expertise on Combatting Four “Faces” of Fraud

Transcript:

Kellen: Welcome to Daily Drive for Friday, September 5th, 2025. I’m Kellen Walker in Las Vegas today on the show.

David Frontiera of Informativ talks about what’s driving up cases of synthetic identity fraud in F&I. “You can do all of these things as you go. It’s not going to slow down the deal. It’s just going to make you feel a lot better and hopefully let those dealer principals sleep a little bit better at night.”

Dealerships, only catch about one in five fraud attempts.

That’s according to David Frontiera, director of national compliance at Informativ. Frontiera spoke with Automotive News senior retail editor Dan Shine about why fraud at dealerships is the new normal.

Dan: David, great to have you with us on the F & I Friday edition of Daily Drive.

David: Hey, thank you so much for having me, Dan. Appreciate it.

Dan: So, you were kind enough to write a guest column for Automotive News online right now at autonews.com, about F & I fraud. It’s something we talk about here on the F&I Friday edition of Daily Drive, but I think we can’t talk about enough. It’s, as you kind of wrote in the article, it’s kind of the new normal of, uh, you know, what F&I managers face.

Talk a little bit about, you know, you kind of mentioned the four faces of fraud. Kind of outline those for us.

David: You know, been in the industry a long time, right? And, and as we all have, I’m sure. Fraud used to be this, this monolithic thing. It was this one thing, and you know what? You might catch it, maybe you’ll lose a car here and there, but you catch it, you try to catch it. It’s changing.

Fraud has now taken on this multiple, you know, interconnected forms and, and every one of them is unique, right? We’ve got identity fraud and that’s obviously where somebody has a fake driver’s license. They try to pass off as real. Oftentimes these things are high quality enough where the untrained eye, the gut feeling isn’t going to catch that anymore.

Then you have synthetic fraud, and as we all know, that’s when somebody cobbles together a lot of information, some of it real, some of it fake to create somebody that looks perfect on paper. And then you’ve got document fraud. These, these next two are the ones that people don’t really think about very much.

Document fraud is where people manipulate or fabricate pay stubs and proof of residence and things like that. And it’s super simple, right? We did a webinar with NADA in August, and I was able to illustrate that it’s super easy to commit. You go to Google, and you can pay $12.99 and you can find companies that will generate a fake pay stub for you.

Finally, you’ve got internal fraud. And this one’s unique because sometimes it’s completely benign and an accident. And then other times it’s malicious. And this could be as simple as an, as one of your employees altering a credit application without knowledge that outside of the norm.

It could be something as complex as somebody manipulating the deal for their own personal gain. And it’s something that we have to look out for. So, this fraud that used to be this singular thing right, has become really multilayered.

Dan: Yeah, it’s, it’s interesting, you know, we talk about insider fraud and internal fraud. You know, I think a lot of folks are more focused on the forces coming in to the showroom with, you know, are these people legit? Is that a real license? Is that, are those real pay stubs? But, and so that maybe gives you a little bit of blinders that you ought to be careful about the people inside your team too.

David: You really do. And, you know, look, years ago it was IDs because they were easy to fake. It was done. And more recently, you’re seeing synthetic fraud is absolutely booming, right? Because synthetic fraud really does exploit the gap between traditional credit checks and ID verification processes, right?

We’re a huge target because we’ve got high ticket values. The transactions are really fast, and we work in an industry that’s kind of historically relied on these gut checks, right? We need to put some technology in place, and when we do that, not only are we going to catch that synthetic fraud that’s just blowing up right now, but the internal fraud, the technology is going to catch that internal fraud as well.

When you have a process that is outlined and enforceable by technology, whether it’s on purpose or not, you’re going to catch those changes in the documentation as the deal goes.

Dan: I guess I should admit that I probably did some ID fraud back in the day when I was changed my license so I could drink, you know, at before I was 21. But haven’t we all and the statute of limitations has expired on that.  But all seriousness, I mean, you mentioned, you know, synthetic fraud up 98% from a year ago, you know, and that’s, you know, nearly the $8 billion in losses for lenders and dealerships and dealerships are catching like one in five of, of these synthetic fraud cases.

Those are scary numbers.

David: Yeah. 19.5% is what they’re catching, right? So, like you said, four out of every five people are moving through a sales process in a fraudulent manner. And that is really an assault on the industry, right? That when you get into, uh, losses that are in the billions, it, it’s no longer a cost of doing business.

We’ve got precedents that are being set by courts now where the dealer is going to be on the hook as opposed to the insurance company. This is something that isn’t going away. The numbers unfortunately are moving in the wrong direction and, you know, dealers gotta get savvy to it, we gotta get creative and we gotta put processes and technology in place that make it impossible. That’s the key.

Dan: We talk a little about, you know, AI and AI for good, AI for bad, and you kind of point out that the spike is kind of due to generative AI and this is kind of why now that it’s become this multilayered assault. Talk a little bit about how generative AI is a key factor in all this.

David: Yeah. And you know, look, I should preface, I am an avid user of artificial intelligence. I think it’s fantastic and I think dealerships should embrace AI as well. There are some phenomenal tools within generative AI that can make doing business easier. It can make, you know, the lead process go better. But we’ve gotta embrace it responsibly. Artificial intelligence can be used in so many good ways, right? But for as many good ways as it can be used, it can also be used in terrible ways. Fraudsters are using it to create these Frankenstein identities. They’re using it to create better paper so that they can utilize those to create fake IDs.

It’s really critical that we kind of fight fire with fire. You need to find some technology that leverages AI to detect these patterns and data anomalies and flags these suspicious behaviors. The more you can automate these verification processes and make your approach to fraud detection as multilayered as the fraud itself, those are the dealers that are going to combat this and win.

Dan: It’s right. It’s, you know, when you wanna combat it, it’s like you’re talking about, it’s technology, it’s different kind of new tools, it’s processes and it’s just, and I would imagine training as well.

David: Yeah. And again, this kind of goes back to this multi-layered approach that we always talk about.

Training is temporary. Turnover is a fact of life. That’s just how our industry works. But that doesn’t mean we stop training, right? We have to train everybody. A process without the ability to enforce that process becomes a suggestion. So not only do we need the training, but we need a process that is enforceable. And the way we enforce that process is, you know, one of two ways. Either you can have a compliance director inside your dealership that’s got a constant headache for eight and a half hours a day, or you can put some technology in there to catch what you might miss. And that proactive, multilayered approach has proven to really help dealers stop fraud in its tracks because you’re measuring for fraud at multiple levels of the deal.

From the minute the customer walks in the door to that license scan, to a synthetic ID fraud check, to the technology letting you know there’s something you missed with regard to credit compliance or permissible purpose. The red flags come into play. You know you can do all of these things as you go it’s not gonna slow down the deal. It’s just gonna make you feel a lot better and hopefully let those dealer principals sleep a little bit better at night.

Dan: David, great stuff, great information. Really appreciate that guest column you wrote for us. I really enjoyed this conversation. Important things to talk about. Thanks so much.

David: You’re very welcome. I appreciate you letting me be here. Have a great day.

Kellen: David Frontiera is Informativ’s Director of National Compliance. He spoke with our own Dan Shine. That’s Daily Drive for this Friday.

Conclusion

Learn more how Informativ proactively prevents fraud for auto dealers including synthetic and id fraud prevention solutions and our document fraud solution – verifiedSTIPS.

Schedule a demo to see it in action.