A domestic dealer-client also operated a car rental operation and was victimized by its rental manager who stole at least $98,000 over a three-year period. The manager encouraged the customers to pay cash for their rentals then destroyed the rental tickets and pocketed the cash. This dealer had no system in place for detecting the missing rental agreements and did not understand the rental business. Furthermore, it should be noted that the dealer’s insurance limit was only $25,000.
These are only a couple of examples of theft we have uncovered. We have discovered theft schemes in service departments, body shops, and parts departments totaling many thousands of dollars. The manner is which the dealers are defrauded is only limited by the ingenuity of the thief.
The size of the dealership isn’t necessarily an indicator of the risk. Small dealerships are usually at risk because they do not have the systems in place or the people in place to monitor the systems. Large dealerships are at risk because they may have so many employees that they lose track of who is responsible for what, which is then used to the advantage of thieves. Few dealers are immune to the dangers of fraud, and any slowdown in the economy will only increase its existence.
If you have never had a risk assessment, call your CPA today. He or she should be able to review all aspects of you dealership and provide you with a risk assessment as well as suggestions for minimizing those risks. Set up an appointment with your insurance agent and make sure you have adequate coverage if you should fall victim to a theft scheme.
Volume 1, Issue 2