VIN Cloning – A growing concern in the Canadian automotive industry

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Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

Use vehicle history to protect against VIN cloning.

Vehicle Identification Number (VIN) cloning is the fraudulent practice of using the VIN from a legally registered vehicle to hide the identity of a stolen or salvaged vehicle. The window of opportunity for VIN cloning often occurs when a vehicle is put up for sale and the VIN is made publicly available on a listing site. The vehicle with the cloned VIN is then typically re-sold, exported and/or financed with a clean title. This is a lucrative business as showcased by a CBC Marketplace episode that uncovered vehicles being shipped overseas to fetch huge profits. 

Although VIN cloning has been around for decades, it’s become more prevalent with advances in technology. Criminals have become more sophisticated in their methods, using software and other tools to illegally change a vehicle’s VIN. This makes it increasingly difficult for the average consumer to detect a cloned VIN, and puts them at risk of purchasing a vehicle with a falsified history.

According to the Canadian Anti-Fraud Centre, which tracks fraud trends across the country, there were 109 reported cases of vehicle identity fraud in Canada in 2020, resulting in losses of over $1.2 million.  This represents a 13% increase from the previous year.2  CARFAX Canada has also seen a similar trend, reporting a 30% increase in VIN cloning investigations since 2020.

The impact of VIN cloning is significant and negatively affects consumers, insurance companies and the automotive industry. Consumers who unintentionally purchase a vehicle with a cloned VIN can face a variety of problems including vehicle safety concerns, reduced resale values, and potential legal issues. In some cases, buyers may be subject to fraud charges if they unknowingly participate in the illegal sale of a cloned vehicle. If the vehicle is repossessed, the new owner of the stolen vehicle incurs the loss of the asset, and may also be liable for any outstanding loans on the vehicle.

For insurance companies, lenders, and the government, VIN cloning can result in increased insurance premiums, defaulted loan payments, and missed tax payments. Additionally, insurance companies can potentially end up paying twice on the same VIN; once on the stolen vehicle and again on the cloned VIN if both owners make a claim.  According to a report published by the Insurance Bureau of Canada, insurance fraud (including vehicle identity fraud) was estimated to cost Canadians up to $2 billion annually in increased premiums and other costs.

The industry is taking steps to address the issue. Many dealerships and manufacturers now use advanced anti-cloning technologies, such as etching VINs on to the glass and other parts of the vehicle, to make it more difficult for criminals to alter the numbers. However, despite these efforts, VIN cloning continues to be a significant problem.

It’s important for consumers to protect themselves by taking steps to ensure that the vehicle they are purchasing is legitimate. One way this can be done is by purchasing a CARFAX Canada Vehicle History Report. The report may indicate if the VIN has been altered, if the vehicle has any previous accidents, or has a salvage title. It’s also recommended that consumers have a reputable mechanic inspect the vehicle before making a purchase.

CARFAX Canada can also help insurers to protect themselves by providing vehicle history data at time of underwriting or during claim processing to help identify possible VIN cloned vehicles. Some valuable vehicle history data attributes are VINs not in operation, odometer mismatches, registrations and/or service events in multiple jurisdictions, and multiple registrations within a year without a sale. This data can help insurers avoid or mitigate loss, and allow them to provide better customer service to their clients.

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