Tuesday, November 10, 2009

Does ELT Help Prevent Fraud?

Buried in a proposal to states on offering a title check service (on DDI's site to promote ELT programs in US States: AllAboutTitles.com) is a story about how the ELT program helped stop a fraud situation. Reprinted here for your enjoyment (wink).

DDI has feedback from our customer (a lender) about the benefit that the title check program provided in noticing and resolving a dealer fraud situation.

The lender finances a vehicle purchase through a dealer. The vehicle, received as a trade in from a prior purchase, has a prior lien on it. The dealer, instead of using the funds from the lender to pay off the lien, continues to make the loan payments for the prior lien.

An ELT participant, the lender begins to worry as they are alerted that the electronic title has not yet arrived. They use the Title Check program and determine that their lien has not been perfected. After contacting the dealer and receiving his assurances that the process is just waiting on some final paperwork (presumably for the previous lender to relinquish the title and a new title to arrive), the lender decides to wait.

After some additional time (and another use of the Title Check program to verify status is unchanged), the lender decides to contact the previous lender. The previous lender (determined from the “title history” portion of the Title Check) reports that payments continue to be made to their loan. The lender immediately contacts the DMV, stops additional loans through this dealer, and begins prosecution. The dealer is found guilty of fraud and jailed.

The lender was able to keep dealer from obtaining $250,000 in fraud, with 22 titles, losing "only" $50,000 before detecting and terminating the fraud. They attribute the Title Check program with saving the credit union $250,000 in fraud from this dealer.

Reference http://www.charleston.net/news/2008/sep/19/car_scam_investigated55066/.

Is your lender using ELT yet?

UPDATE 1/29/2010: I found out recently that our customer has been able to fully recover the loss, bringing the total prevented/recovered to $300,000.

Image: Bad Car Image