And How to Combat It.
The Australian Automotive Dealer Association has delivered a webinar aimed at highlighting the increasing risk of fraud, both internal and external to Dealers. The Webinar was presented by Maya Sutanto and Steve Bragg of Pitcher Partners. Steve is also an Advisory Board Member of AutoSettle.
Fraud in automotive dealerships is on the rise, both internal (occupational fraud) and external (cybercrime). Dealerships are losing 5% of revenue to fraud which can take many forms. Real-life case studies include a $10 million theft by a controller and a $250,000 scam via warranty refunds. Other factors that enable fraud include synthetic IDs, redirected payments and ransomware attacks.
“The fraud triangle—pressure, opportunity, and rationalization—is very real. Today, all three are present in many dealerships.”
Maya Sutanto, Pitcher Partners
Key factors contributing to dealership fraud include:
- reduced oversight due to management-ownership separation
- outdated legacy systems
- increased financial pressures post-pandemic
- poor segregation of duties
- lack of monitoring systems
“The root cause of many cyberattacks is outdated legacy systems patched with quick fixes, creating vulnerabilities.”
Steve Bragg, Pitcher Partners
Dealerships need to prioritise proactive fraud detection and prevention – recovering losses is rare. Solutions highlighted included:
- creating a fraud-aware culture through anonymous hotlines, regular audits, and management visibility into dealership operations.
- leveraging technology like data mining to detect fraud patterns
- improving user access controls
- conducting regular reconciliations
- maintaining effective cyber hygiene
The theme of the webinar was that dealerships must adapt and use available technology to safeguard against increasingly sophisticated fraud.
“It’s not a question of if fraud will happen but when. Your preparedness will define the damage.”
Steve Bragg, Pitcher Partners