Protecting Against Fraud
Stopping Automotive Fraud in 2025: A Dealer-First Playbook for Canada
Canadian dealerships face a sharper fraud threat in 2025. Theft to export is cooling as ports tighten controls, but first-party fraud and synthetic IDs are climbing in F&I. Use this playbook to cut fraud without killing sales velocity.
The 2025 Fraud Picture
Auto theft trending down: Statistics Canada reports a “17% drop in the 2024 motor-vehicle theft rate versus 2023, to 239 incidents per 100,000.”
CBSA interception rising: In 2024 the Canada Border Services Agency “intercepted 2,277 stolen vehicles at ports and railyards,” with seizures continuing in 2025.
Application fraud hurting F&I: Equifax Canada found “Q4 2024 auto application fraud hit 0.26%,” and “about 80% involved falsified income or documents.”
Losses are still massive: The Canadian Anti-Fraud Centre logged “$638M in fraud losses in 2024,” while noting most cases go unreported.
New AML rules: “As of April 1, 2025, financing or leasing entities fall under FINTRAC obligations” for KYC, monitoring, and reporting.
Where Dealers Are Exposed
First-party misrepresentation: falsified pay stubs, bank statements, fictitious employers.
Synthetic IDs: real plus fake data blended to bypass weak checks and secure export-bound units.
Theft to export pipelines: re-VINned vehicles slipping into trade-ins and wholesale.
Digital retailing gaps: remote approvals and third-party deliveries without liveness checks.
Internal process risk: skipping verification to “save the deal.”
The Control Stack for Dealers
Identity and Documents
Verify identity and supporting documents with AI-based software.
Align to DIACC’s Pan-Canadian Trust Framework for “Verified Person.”
Run document forensics on PDFs. Require payroll-connect or bank-connect for higher-risk files.
Re-verify at delivery if pickup person, address, or payment method changes.
Payments and Funding
Prefer wire with cleared funds for high-value deliveries.
For card deposits, enforce address verification and step-up authentication. Match cardholder identity at delivery.
Do not release a vehicle on a pending e-Transfer. Funds must be fully received.
Process Gates
Two-person release rule for luxury and top-stolen SKUs.
Thirty-minute cooling-off between conditional approval and delivery to finish fraud checks.
No after-hours releases without manager sign-off and fresh re-verification.
Dealer Group Blueprint
Governance
Appoint a Head of Fraud and AML at group level.
Standardize policy and provide rooftop SOPs.
Route borderline deals to a central exception desk.
Tech Stack
Canadian-hosted ID verification with liveness, document forensics, and bureau corroboration.
Immutable deal jackets with audit logs.
Integrated CPIC and provincial brand checks in desking.
Sanctions and PEP screening for financed or leased deals.
Store-Level Playbooks
Sales: scan ID before test drives, control keys, require staff presence for remote drives.
F&I: step-up verification for thin-file or new-to-Canada applicants.
Used: no intake without a logged CPIC check.
Delivery: cleared funds plus re-verification. Photograph buyer with vehicle.
Training and Accountability
Run monthly red-flag drills with anonymized case studies.
Maintain a fraud wallboard showing blocked fraud and dollars saved.
Mystery shop your stores to test release controls.
KPIs That Matter
Blocked fraud per 1,000 applications
Percent of deals with full ID verification at approval and delivery
CPIC checks logged per trade-in
Exception rate for after-hours releases
Average funding time by risk tier
30-60-90 Rollout
Day 0 to 30
Make CPIC checks mandatory for all trade-ins.
Require liveness plus face match on luxury SUV deliveries.
Day 31 to 60
Deploy DIACC-aligned ID verification for all applications.
Launch your FINTRAC compliance program.
Day 61 to 90
Stand up a central exception desk and begin quarterly fraud audits.
Tie bonuses to fraud prevention performance.
Bottom Line
Fraud is shifting. Theft rates are easing, while F&I fraud is accelerating. Dealers that bake fraud prevention into the deal process will protect margins, fund faster, and stay compliant in 2025.
