Auto insurance claims adjusters and special investigative units (SIU) have been put on notice about a proliferation of fraudulent auto schemes involving rental cars. This type of criminal activity will impact states with top hospitality industries, like Florida, where tourism was ranked number one and was responsible for welcoming 91.5 million visitors in 2012.
According to a recent Claims Journal article, Kraig Palmer, an investigator with the California Highway Patrol, warned that he has seen rental car schemes “rise faster than any other auto fraud trend” in the past 12 months.
Perpetrators are often found to be opportunistic drug addicts and knowledgeable street gangs, the article revealed. The crux of the fraud targets car rental companies and involves renting multiple cars. Then, the rented cars are used to commit crimes. They eventually are recovered, but often burned out or with significant collision damage.
It is a difficult crime to nail down because it can occur on many different levels—using multiple fraudulent or stolen identities. Also, incentive programs at the car rental companies make it easy to rent a car, often with online registration and no face-to-face interaction.
It’s not surprising, then, that insurers will see more claims involving fraudulently rented cars. The criminals and gangs have access to money, and will use that money to educate themselves on companies’ processes. All it takes is paying one disgruntled employee to gain knowledge of the claims process, Palmer added.
He recommends that insurance companies thoroughly examine auto property damage or auto bodily injury claims involving rental cars, searching for patterns such as: how long the vehicle was rented, how many vehicles were rented by the same individual, and if there were more vehicles rented by the same individual that experienced damage.
If there are red flags, Palmer suggests going to the regional security manager instead of the car rental agency. That manager will have access to the complete contract and credit amount. Due to privacy regulations, law enforcement will likely need to be involved, he concluded.