Identity theft of cars

Jun 1, 2006 by

We recently attended a presentation put on by a member of the National Insurance Crime Bureau (NICB). The topic was vehicle cloning.

Each year there are about 1.2 million cars stolen in the US.   This number has been fairly stable for the past 10-15 years.  About 65% are recovered.  Annual cost estimates range from eight to twelve billion dollars per year.   When cars are stolen for resale by professional thieves, the typical transaction nets $30,000.   So how do they sell a stolen car without getting caught?   There are several methods.

Using the first method, they visit the parking lot of an upscale mall and pick out a nice looking new car. Let’s say a green Durango.  The vehicle identification number (VIN) is displayed on a plastic strip under the front windshield so they write it down along with the license and the make and model of the car. It is also helpful if the car is unlocked so they get the owner’s name and address from the registration.

Next, they steal a similar make and model car from another location.  Let’s say a red Durango.  A flatbed tow truck is sufficient equipment for a quick removal.  They take it to their shop, remove the front window glass, and change the locks.
For transponder equipped vehicles, they can exchange the locks and security system with replacement parts bought at a junk yard from a similar totaled vehicle.   They then scan both the door sticker plaque and the dashboard VIN plate.  Using computer software, they change the VIN number of the red car to the VIN number of the green car.   They then print the altered scanned images on a color laser printer.   Next, they glue them back onto the red car and overlay with clear plastic to make them look identical to the originals.  Lastly, they replace the front window glass.   They have now cloned the green VIN onto the red car.

The next step is research.   They look up the owner of the green car to get the owner’s name and address (Mr. Green).   They may enlist the aid of a DMV employee who is looking to supplement his income.  Then they write a letter to the DMV and ask for a change of address to their P.O. box in a different state.   They may also report the plates as stolen and ask for new ones after the change of address.   There are no agreements between states to trade information about what VIN numbers are registered in a given state.   Now “Mr. Green” sells the red car to an accomplice.   They apply for new title.   They now have a clean title for the stolen vehicle.   They then sell the red vehicle to an innocent party (IP).  The IP registers his new red car and lives happily ever after.   Well, almost, for there are a few stray details that someone else has to clean up.

What happens to Mr. Green?   Hopefully, he doesn’t get stopped by the police for a traffic infraction.   If he does, the police query of the DMV data bank shows the green Durango is owned by someone else, and has different license plates.   It is kind of hard to explain, especially if Mr. Green has already been caught breaking a traffic law.   Assuming he doesn’t get stopped, what happens?   If he wants to sell his car, the DMV will give the new purchaser a rude reception when they try to register it.   If Mr. Green stays clear of the police and doesn’t try to sell his car what then?   After a while he will notice that he is driving on expired tags.   Was the renewal notice lost in the mail?   A trip to the counter of the DMV confirms he is the victim of vehicle identity theft.

What other variations exist?  First, instead of cloning an existing VIN number, the thieves can also create a number that was never issued.   VIN formula descriptions and meanings are readily available over the Internet.   The thieves scan a good title from one state, alter the scanned image to accommodate the new information and print out the title on a high quality paper (bought, stolen or furnished by a bribed DMV employee).   They then go to a different state, pose as a new resident and apply for a new clean title.   After they have the new title and plates they sell the car to an IP.   The same fictitious VIN can be used several times in different states in this manner.

Another variation is used for insurance fraud.   The doctored car with new plates is sold to an outsider, who agrees to participate in the fraud.   According to his tax return, he makes $30k a year.   Since he is such an exemplary saver, he can afford to buy a year old Escalade for $50k cash, (according to the title transfer application).   He calls his insurance agent and buys full coverage for his new ride.   He drives it for two months, making sure to let his neighbors see it, and even volunteering to drive the neighborhood kids to football practice a couple times.  Then, much to his surprise, his new car is stolen!   He reports it to the police and to the insurance company.  The police close the case because there is no evidence.   The insurance adjuster (who smells a rat) interviews the neighbors.  “Sure we saw the car,” they say.  The insurance company then issues a check to the former owner to replace his stolen vehicle per the terms of the policy.   He cashes the check, deducts his pre-agreed small handing fee and forwards the remaining proceeds to the ring operator.   The car is loaned out again to a different straw buyer (after the VIN is updated) for a repeat performance.   After several transactions the car may be finally sold to another IP-usually at a substantial discount at the corner of “Walk” and “Don’t Walk”.   The trail ends.

In addition to the insurance companies, the vehicle manufacturers also share in these losses, because the IPs bring their cars in for warrantee work.   The original buyer may not have bought an extended warrantee, but you can bet that the new VIN shows an extended warrantee was purchased.   The dealers and ultimately the manufacturers are thereby defrauded.

But wait, you say, I thought that the VIN was printed/engraved/stamped on each car in several places, some hidden.   This is true, but those that are readily accessible are also changed (die grinder, bondo, paint, new stamp).   The hidden VIN numbers constitute a continuing cat and mouse game.   The crooks get caught, they tell their friends how, and that hidden location now becomes public information via the Internet.

So how should you, as an average consumer, protect yourself?   First, cover your VIN so it is not available for easy duplication.   Secondly, know when your registration is due – if the renewal doesn’t show up on time call the DMV to verify that they still have your correct name and address for the vehicle.   Thirdly, before buying a car, use one of the national databases, such as Carfax, to check the background of the car you want to buy.   The national private databases combine information from all states.   A few warning signs will quickly jump out at you.  First, if it is only a year or so old, is there a lien from a bank or did someone pay $50k cash for the car?   Secondly if it is a couple years old, is there a history of registrations and a service history?   Or did the car suddenly spring into existence as a three year old?  Most obviously, does that same VIN exist in several states?

Lastly, if the deal seems too good to be true…

…it probably is.