Industry eyes virtual notary services to identify digital car buyers

Verifying a customer’s identity in digital vehicle sales is a leading fraud issue for dealerships during the COVID-19 pandemic. Notary services are one option dealerships have at their disposal to confirm an identity outside the dealership, and experts say these services are increasingly performed virtually.

For most dealerships, there is still an identity check before final delivery, Digital Air Strike COO Erica Siestma told Automotive News. This can be done either in-person at the dealership or through a notary for out-of-state or remote deliveries.

“Even with Carvana there is an ID check so there is no true ‘digital transaction’ like you may have with buying something from Amazon,” she said in an email.

Because several states require certain documents such as car transfers to be notarized, retaining a commissioned notary inside a dealership is not unusual. However, an alternative to the traditional notary method of identification verification for remote deliveries is on the horizon, Siestma said, and something Digital Air Strike is exploring. As adoption of virtual services grows, customers may have more choices in terms of when and where these required documents are verified.

In states that allow virtual services, such as Florida, Nevada and Texas, dealership employees could notarize documents for remote deliveries without leaving the store, said Chris Sturdivant, National Notary Association vice president of business development. Given the risks associated with the coronavirus, the development could help dealerships mitigate fraud from a distance.

“It definitely would reduce the amount of time a person would have to spend in the presence of another person or an office,” Sturdivant said. “Usage and adoption [of virtual notary services] has grown significantly in the last six months — and will probably continue to grow.”

Digital Air Strike is not alone in moving into the space. Last month, J.D. Power partnered with Notarize, a leading software platform provider for remote online notarization, to enable remote identity verification for automotive transactions.

Social distancing and mask requirements coupled with an uptick in online sales transactions are adding hurdles to the sales process, dealers say. Half of the 137 respondents to an Automotive News survey of U.S. franchised dealerships fielded Aug. 20 to Sept. 9 said confirming a customer’s identity is their top fraud concern in a COVID-19 environment.

Fraud prevention remains a key component in virtual notary services, which include additional verification steps that may not be performed during an in-person meeting, such as asking customers to identify a previous address or vehicle registration.

“That software-driven identity check is required for remote online notarizations,” Sturdivant said. “You’re not going to see that type of security check in an in-person notary situation.”

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