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The Resource Center Identity Theft & Protection The Resource Center | article

How ID Theft Affects Car Owners and Buyers

First-time car buyers and long time car owners can both become victims of identity theft.

First-time car buyers and long time car owners can both become victims of identity theft.

When Mike Cella walked into a dealership late last year, he didn’t expect he would have any problems trading in his 2009 GMC Yukon Denali for a newer model. That is, not until the Massachusetts car dealer told him he couldn’t give Cella the full blue book trade in value for the truck because it had been in four accidents in Wisconsin.

Cella had never been to Wisconsin, but two identity thieves had. These criminals had copied the vehicle identification number (VIN) assigned to Cella and put it on a car they had stolen to mask the theft. The stolen car was a 2007 GMC Yukon Denali, similar enough that no one who checked the VIN would find the assigned number strange. Over the course of seven years the stolen vehicle was sold multiple times and had racked up the accident count.

The final owner of the car using Cella’s VIN had nothing to do with the theft. She purchased the SUV from an equally unknowing dealership in Wisconsin.

Stolen VINs aren’t the only way identity theft can haunt car owners. Many first-time car buyers are shocked to discover that they have been rejected for a vehicle because someone financed a car using their information and then failed to make any payments.

Kevin Gauthier, a law enforcement liaison with a stolen vehicle recover company, estimates that about 70 to 75 percent of stolen vehicles are obtained through fraud and identity theft. That number was 10 percent in the 1990s. The popularity increase for this kind of theft has a lot to do with ease of accessibility. Personal information is widely available and a thief only needs to get their hands on some of it to apply for and finance a car. Not only is it easier than jimmying a lock, criminals are able to steal higher quality vehicles and sell them for more profit without having committed a physical theft.

Car dealers unknowingly play a part in this scheme. Their motivation to hit sales goals, especially when deadlines approach at the end of the month, means that many will close a deal without taking all precautionary steps. Of course, once the sale has been made, the car and the thief are long gone.

These types of fraud affect car owners and buyers in a variety of ways:

  • Poor credit: Identity thieves who use your information to purchase a car will often use your credit card or apply for new lines of credit, ruining your credit. Since good credit is essential for buying a vehicle, not only will you lose out on a car, you will also have to spend time and resources challenging the fraudulent purchases on your credit account.
  • Loan rejection: Poor credit means that creditors will consider you a risk and avoid lending to you. Most people purchase cars using loans, so getting rejected often means that you won’t be able to get the car you need.
  • High interest rates: If your credit is good enough to get approved, but still not great, you may end up paying a much higher interest rate than anticipated. In California, for example, car buyers with bad credit can expect to pay around 18 percent interest, while those with stronger credit histories could pay for around as little as 2 percent.
  • VIN: If you are the purchaser of a car with a stolen VIN the police may seize your vehicle.

Protecting yourself from risk of car-related identity theft involves taking a few simple steps. First, make sure to check the VIN on the car for tampering, and ensure that the seller’s name and VINs match on all vehicle documents. You can also get a history report about the car which can tell you about previous owners and accident history.

Signing up for a credit monitoring service is also a good idea. This service will alert you when certain activity occurs in your credit files that may indicate fraud. The earlier you catch the discrepancy, the easier it is to recover.