WASHINGTON — Credit unions and other financial institutions may have a new fraud scheme to warn members/consumers about, as federal regulators say scammers are using artificial intelligence to clone legitimate auto dealership websites to steal consumers’ money and sensitive personal and financial information.
The Federal Trade Commission issued an alert last week warning that criminals are creating fraudulent dealership websites that can closely mimic legitimate businesses, including their logos, vehicle listings, photographs and customer testimonials.
The sophistication of the sites can make it difficult for consumers to recognize they are dealing with criminals before providing payment information, bank account details or other personally identifiable information.
For credit unions, the scheme presents risks on multiple fronts, including fraudulent payments and potential account takeover or identity theft if members surrender financial credentials or other sensitive information.
“We wanted to make sure that we put this alert right away, so that consumers could be, you know, on the lookout for this kind of situation,” Rosario Mendez, assistant director in the FTC’s Division of Consumer and Business Education, said.
AI Making Fake Sites More Convincing
The FTC said scammers are using AI and other technology to copy legitimate auto dealership websites, potentially allowing criminals to reproduce much of the information a consumer would normally use to determine whether a seller is trustworthy.
Consumers searching online for a particular vehicle may encounter one of the fraudulent sites, believe they are communicating with an actual dealership and proceed with a transaction.
That can result in consumers sending money or providing personal and financial information to scammers.
“Then you realize that it was all a scam, and there is no car waiting for you,” Mendez said.
The warning gives credit unions another potential fraud issue to raise with members, particularly those shopping for vehicles online or considering purchasing a vehicle from a dealership outside their local area.
FTC: Don’t Rely on Search Results
One potential warning sign is how consumers find the dealership.
Mendez cautioned consumers against assuming a website appearing prominently in an internet search is legitimate. She said consumers should scroll beyond sponsored search results and independently verify the dealership’s identity and contact information before conducting a transaction.
Consumers also should see the vehicle in person whenever possible before sending money.
For long-distance transactions, Mendez said buyers who cannot visit the dealership themselves could ask someone they trust to inspect the vehicle or hire an independent inspection service.
Those precautions can be especially important before authorizing large-dollar payments for a vehicle.
Indiana Reports Increase in Fraudulent Sites
The Indiana Secretary of State’s office said it also is working to combat fraudulent websites impersonating legitimate auto dealers and described the problem as increasingly common.
“Unfortunately, these scams are occurring with alarming and increasing frequency, putting Hoosier consumers and legitimate Indiana businesses at risk,” the office said in a statement.
When its Auto Dealer Services Division receives a complaint involving a fraudulent dealership website, the office said it contacts website hosting companies in an effort to have the sites removed as quickly as possible.
Enforcement can be difficult because many of the criminals operate outside the United States, the office said.
Indiana officials said they are working with the FTC and other government agencies to identify fraudulent operations and disrupt their activities.
