White-collar auto crime: The billion-dollar fraud reshaping the car industry

WASHINGTON (7News) — An ongoing 7News investigation into auto theft has uncovered a new trend driving up costs for car buyers and sellers. Brazen armed carjackings may capture headlines, but white-collar auto crime is on the rise.

According to the Federal Trade Commission, nearly 80,000 cars have been stolen so far in 2023 via fraud.

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Instead of smashing and grabbing, these car thieves utilize technology, stealing with a handshake and a smile. Their arsenal includes fake pay stubs and stolen out-of-state driver's licenses, allowing them to fabricate employment histories, income streams and identities. These fabricated "financial records" smooth the road for leasing or purchasing vehicles. Once a loan is approved, the thieves drive away with a new or used car only to vanish without making a single payment.

These sophisticated criminals target car dealerships and lenders across the DMV and country. What sets this wave of auto criminal apart, according to those who've met them, is their audacity.

Mike Luna, Finance Director at Bethesda Euro Motorcars, said he has to scrutinize a potential customer’s financial records like never before. He described one customer's suspicious tax record.

"They were trying to claim that they were making $9,500 a pay period or $118 an hour," Luna said of one recent attempt at securing a loan.

The Federal Trade Commission reports a staggering number of auto-related fraud cases in 2023, with over 1,600 in the DMV area alone.

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Auto lenders estimate that each instance of fraud costs around $100,000 --- translating to billions in annual losses.

John O'Donnell, the head of the Washington Area New Automobile Dealers Association, warns synthetic fraud is reshaping the auto theft landscape.

“The cars are being stolen so frequently and in such large volumes that we’ve not been able to wrap our arms around the total dollar value,” O’Donnell said.