New industry research shows fraud is on the rise at auto dealerships and that most dealers are concerned about the threat.

The growing crime can manifest as income, vehicle or identity fraud. One report released this week by eLend Solutions said 77% of dealer survey respondents experienced more fraud incidents in the past two years. 

Nearly half of those, or 48%, reported they lost four or more vehicles to identity fraud, and 24% lost 10 or more. In just 2025, 41% said their stores lost vehicles to identity thieves.

"This is a snapshot of the onslaught of fraud auto dealerships are experiencing in all aspects of their business, much of it a result of the increasing digitization of the auto purchase process," said Pete MacInnis, founder and CEO of eLend Solutions.

"The data underscores that identity fraud is especially pernicious, even though its number one factor – the driver's license – makes it the easiest to solve."

Nearly half of surveyed dealers cited bogus driver's licenses as the top reason for the increase in auto purchase fraud.

"Unfortunately, the problem is increasing because too many dealers rely on driver's license scanners that lack forensic authentication and DMV and PII data matching,” said MacInnis, who predicts artificial intelligence will accelerate fraud.

A separate study by consumer credit reporting agency Experian highlights dealers’ anxiety about their vulnerabilities. About 90% responding to its survey are concerned about the possibility of fraud, and 70% believe fraud is increasing in the industry. 

Dealer losses can be substantial, Experian learned, as 45% of dealer respondents said one incident costs them up to $20,000, and nearly a third said they’ve lost even more money. 

Dealers say they bear most of the losses, 64% saying insurance typically covers less than half the cost. As for lenders, 67% of dealers estimate they cover less than half of losses and some none.

Beyond concrete losses, many dealers told Experian that efforts to prevent fraud can impede what would otherwise be smooth customer transactions. More than half named the delicate balance their biggest challenge, while nearly half said verifications slow processes and frustrate customers.

The friction may be why almost half of dealers validate customer incomes only when they sense something may be awry, the Experian study found.

“The best defense is simple: confirm identities upfront using multiple data sources, verify income and employment early, validate trade-in vehicle details so clean deals move quickly, and flag anything that doesn’t add up,” said Experian Senior Director for automotive Jim Maguire.