Deal Pack Blog
The Importance of Verifying Proof of Income for BHPH Dealers
It’s not uncommon in the Buy Here Pay Here industry to require proof of income from your customers. This is a condition for approval by most special financing sources. A pay stub is accepted and used to confirm current employment as well as earnings that the customer provided on their credit application. It’s a match, or is it?
With today’s technology, it’s become an easy task to falsify income. Consumers have access to websites which provide the ability to create phony pay stubs. These sources will even assign a phone number the customer can furnish to the dealer for verification purposes. For a couple hundred dollars, a less than credit worthy customer can create whatever documentation they need to purchase a vehicle. It’s in your best interest to conduct your own employment and income verifications in an attempt to avoid this issue.
Unfortunately, these sites are not just limited to use by consumers. A special finance dealer is capable of purchasing several phone numbers to verify income, employment and residence for which combinations can be shuffled on credit applications. The dealer makes the sale and the customer gets a new ride. It plays out as a win-win situation, at least until the deception is unveiled. This will likely result in unwinding or buy back of the deal and possible criminal charges. Even if it doesn’t become a criminal case, a dealership who participates in these activities risks ruining the relationship with the special finance bank of future loan purchases. Once the word spreads throughout the special finance community, chances are the banks will all avoid purchasing that dealership’s paper.
The Federal Statute states it is considered bank fraud when someone “knowingly executes, or attempts to execute, a scheme or artifice to obtain any of the moneys, funds, credits, assets, securities or other owned property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations or promises.” Criminal penalties include fines of up to $1 million and/or up to 30 years in prison.