In recent years, the RV industry has experienced remarkable growth, with more individuals embracing the freedom and adventure that RV life offers. The popularity surge brought new challenges for RV dealers, particularly in their data security and fraud prevention.
It has become increasingly clear over the years that many RV dealerships are not adequately prepared to manage sensitive consumer data or combat sophisticated fraud techniques effectively.
A recent industry-wide survey shed light on RV dealers’ alarming gaps in security protocols and fraud awareness. The findings reveal a pressing need for dealerships to reassess their current practices and implement more robust systems to protect their businesses and customers.
Synthetic ID fraud a real threat
In September 2024, 700Credit conducted an industry-wide survey of RV dealerships, their understanding of fraud and their processes for obtaining copies of driver’s licenses.
Among the survey’s most concerning revelations is the widespread lack of awareness regarding synthetic fraud.
While 67.1% of RV dealer respondents said they were familiar with the concept, only 25% demonstrated a genuine understanding of how synthetic IDs are created.
Dealers’ knowledge gap is particularly troubling given synthetic fraud’s increasing prevalence in the RV and automotive industries. Even more alarming, 33% of RV dealers reported being completely unfamiliar with synthetic fraud. The finding highlights a significant vulnerability in the industry’s defenses against sophisticated criminal activity.
The consequences of being unaware and unprepared are stark.
In the past 12 months alone, 30.3% of dealers reported having an RV stolen due to fake identity or synthetic fraud.
The finding underscores the very real and immediate threat inadequate security measures pose to RV dealerships. Moreover, 21.3% of dealers experienced RV theft due to key fob swaps within the same period, emphasizing the need for enhanced security protocols across all dealership operations.
The photocopying risk
The practices surrounding identity verification during test drives are equally troubling. A staggering 26.3% of dealers still rely on simple photocopies of driver’s licenses for test drives.
Photocopying licenses is outdated and offers little protection against sophisticated fraudsters, who can easily produce fake identification. By contrast, only 4% of dealers validate driver’s licenses against DMV databases, which are currently the most secure method to verify identities.
The financial implications of these security lapses are significant. The survey found 18.4% of dealers had to buy back at least one RV from their lender because of a fraudulent loan application in the past year.
RV buybacks represent a direct financial loss and damage lender relationships. Buybacks can harm a dealership’s industry reputation.
Enhancing security measures
Given these sobering statistics, it is clear that RV dealers must take immediate action to enhance their security measures and fraud prevention strategies.
The first step in this process is to increase awareness and education about synthetic fraud and other sophisticated fraud techniques. Dealerships should invest in comprehensive training programs for all staff members, ensuring everyone from salespeople to finance managers understands the various forms of fraud they may encounter and how to identify red flags.
Implementing more robust identity verification systems is imperative. Although photocopying driver’s licenses may have been sufficient in the past, today’s fraudsters can produce high-quality fake IDs that can easily fool the naked eye.
RV dealers should consider adopting advanced identity verification technologies to validate driver’s licenses against
DMV databases in real time. Tools such as these help prevent fraud and demonstrate a commitment to protecting customer data, which can enhance trust and reputation.
Test drive policies should be thoroughly reviewed and strengthened. Requiring salespeople to accompany customers on all test drives is a simple yet effective measure that can significantly reduce vehicle theft risk.
Additionally, implementing a strict key management protocol, including using secure key storage systems and careful key fob tracking, can help prevent incidents of key fob swaps and unauthorized vehicle access.
Understanding today’s data privacy requirements
Data privacy is essential for RV dealers.
Fraud detection systems using advanced analytics should be integrated into loan applications. Industry collaboration can help share information on fraud trends and prevention strategies. Regular security audits are essential to identify and address vulnerabilities.
Fraud-prevention measures protect customer information, prevent financial losses and ensure regulatory compliance. By implementing these practices, RV dealerships can safeguard operations, maintain customer trust and stay ahead of evolving fraud tactics.
The path to enhanced security may seem daunting, but it is a necessary journey all RV dealers must undertake. Dealers will find they have reduced losses, built stronger lender relationships and increased trust.
The recent survey findings should serve as a wake-up call for the RV industry. The time for complacency has passed. The threats are real, but so are the solutions. By taking decisive action now, RV dealers can safeguard their businesses and contribute to a more secure and trustworthy industry overall.
Ken Hill is managing director for 700Credit, a leading provider of credit reports, compliance, identity verification and soft-pull products.
