Car dealers aren’t the only ones experiencing significant fraud incidents nowadays. Experts at 700Credit found that motorcycle retailers are getting hit by fraud, too. The provider of credit reports, compliance solutions, soft pull and identity verification products recently announced results of an industry-wide survey of motorcycle dealerships that reveals “alarming” trends in synthetic fraud and vehicle theft, highlighting the urgent need for enhanced security measures across the industry. The online survey was presented to more than 2,400 motorcycle dealers and dealership executives across the U.S. during September.
Among the key findings:
—Nearly 60% of dealerships reported familiarity with synthetic fraud, though only 18.7% claimed to understand how synthetic IDs are created. This knowledge gap highlights a critical area for industry education and training.
—21.5% of dealerships experienced motorcycle or powersports vehicle theft due to fake identities or synthetic fraud in the past 12 months.
—Of those affected, 80.3% reported losing between one and five units, while 19.6% suffered losses of six or more units.
—Dealerships show varied approaches to test drives, with 20.6% allowing unrestricted test drives, 20.6% permitting dealer-accompanied rides, and 18.7% offering loaner motorcycles. This diversity in policies underscores the need for standardized safety measures, according to 700Credit.
—Only 19.6% of dealerships reported having a driver’s license validation solution in place. Experts said this low adoption rate of crucial identity verification tools exposes a significant vulnerability in fraud prevention efforts.
—Less than 5% of dealers said they collect a digital copy of the driver’s license and compare it against a DMV records database.
—The survey revealed inconsistent methods for capturing and storing customer driver’s license information, as 48.6% of dealerships still store physical copies in paper deal jackets, while only 10.3% utilize digital storage solutions.
—In the past year, 20.6% of dealerships were forced to buy back vehicles from lenders due to fraudulent credit applications.
—Of these, 80.4% had to repurchase between one and five units, indicating a substantial financial burden on affected businesses.
Along with these broader industry challenges, 700Credit managing director Ken Hill said the survey results underscore the critical need for enhanced security and anti-fraud measures in motorcycle dealerships.
Hill urged operators to implement robust identity verification systems, driver’s license verification resources, improve staff training on fraud detection and collaborate with financial institutions to mitigate risks.
“While we’re excited about the potential for growth and innovation, we must address the rising threat of fraud head-on for motorcycle dealers,” Hill said in a news release. “Our survey results are a wake-up call for dealerships across the nation. It’s imperative that we invest in robust ID verification systems, implement thorough driver’s license validation processes, and secure deal jackets to protect sensitive customer information.
“The industry must forge strong partnerships with technology providers to develop and implement cutting-edge solutions. By strengthening our defenses against fraud, we not only protect motorcycle businesses but also build trust with customers, paving the way for long-term growth and success in the evolving marketplace,” Hill went on to say.
