Do you need fraud prevention at your equipment rental business?

You might be asking yourself; do I really need to pay for another service? Sometimes it seems like all the costs required to run a business don’t have an equal benefit. People will tell you that you need robust marketing (such as a fancy website, Google Ads and more), accounting systems, and even more robust theft prevention (such as GPS trackers for equipment and special locks). So, on top of all of that, is additional fraud prevention necessary or just a waste of money? 

In this article we will dive into a few scenarios you might find yourself in and take an in-depth look into fraud prevention.  

Scenario 1: You haven’t been hit by fraud.  

Great news! This is the ideal situation and we’re happy your business hasn’t been targeted by criminals yet.  Your good fortune could be due to a variety of factors. Perhaps you already have implemented a fraud prevention system that has stopped any fraudulent transactions from going through.  

Or perhaps you run an operation in a small town, and feel you know most, if not all, of the customers who come into your business. Occasionally, someone you don't recognize comes in and rents from you, but so far you haven’t suffered any losses due to stolen equipment. That’s wonderful! If only fraudsters knew how to leave a good thing alone…  

Scenario 2: That other rental equipment company got hit.  

You’ve heard from others that an equipment company a few towns over was hit with a 10k+ loss when a piece of their equipment was not returned by someone using a Fake ID at the time of renting.  

The circumstances for your business may be different than theirs. The rental company may have been in a larger town, or more lackadaisical about its theft prevention. Your business might already have a GPS tracking system, secure locks, and security cameras. In that case, you should be good even if someone were to never return your equipment, right? 

Scenario 3: You experience a loss. 

Maybe you went years without being targeted by fraudsters, but today it finally happened. A piece of your equipment was never returned by one of your customers. The good news is you have GPS trackers on your equipment, and you know right where it is. Your local police might have the time and resources to investigate and get it back for you, which would be great. However, that’s not always the case, as we’ve heard our fair share of stories from clients where a GPS location wasn’t enough for the stretched-thin local authorities to investigate the fraud.  

So now you are out $10,000+ for the equipment.  

You would think this is where your insurance would come in. Unfortunately, many equipment insures have loopholes for this particular type of theft. Unreturned equipment (as opposed to equipment that was stolen from the equipment rental business or the renter) is often considered “voluntary parting,” a type of fraud and not theft, and is therefore not covered under the policy. Even on the off chance that your insurance does cover fraud, you could be hit with costly premium hikes going forward. Furthermore, most plans have a deductible. So, in addition to losing the initial piece of equipment, now you must pay the deductible before you receive any assistance from your insurance company in terms of monetary relief. 

Even if your business has never found itself in this 3rd scenario, there is a good chance it will be in the future. So, let us look at the ways to avoid “voluntarily parting” with tens of thousands of dollars.  

How does Fraud Prevention help avoid scenario 3? 

If you do any research on the matter, you will see there are several different methods out there to prevent fraud (data checks, AI, ID verification, etc.). To keep it simple, we will focus on simple ID Authentication, which is where you ensure that the physical ID (such as a Driver’s License or Passport) is real and authentic. This type of fraud prevention is more straightforward and prevents fraudsters who might use real stolen data to pass data checks.  

Let’s dive into the 3 main benefits of ID Authentication:  

Deterrence 

Adding an ID scanner at your rental counter can deter criminals from attempting to go through with the rental in the first place. For these fraudsters, it’s one thing to have a convincing fake ID that they were planning to use to steal your equipment. It is another to watch you conduct a live authentication scan of that fake ID right there while they stand in the store.  

If a customer was planning to steal the equipment after renting with their actual ID, this step can be a deterrence as well. The ID authentication system has the ability to save scans that can later be presented to law enforcement. We’ll circle back to this point in a moment.  

Catching Fake IDs 

If the fraudster decides to go through with the transaction, the ID scanning system will run dozens of forensic tests on the document and reference them against a robust global document library for comparison. If the document result comes up as FAILED, you’ll know something fishy is going on and can avoid renting and losing your equipment.   

Record Keeping  

ID Authentication systems, such as PALIDIN, allow you to keep transaction reports of scans that were conducted. These reports can be saved with your other rental paperwork (such as the equipment rental agreement) or stored individually. Transaction reports can be crucial in the event of finding a fake ID (which you could then share with law enforcement).  

Even if a piece of equipment is fraudulently kept by a renter who used a valid real ID, the transaction report could be the extra piece of information the police would need in their investigation. Ensuring your equipment is found and returned to you in a timelier manner.  

Like GPS trackers, fraud prevention doesn’t solve it all, but it is a necessary addition to your loss prevention strategy. The benefits of ID Authentication outweigh the cost and can ultimately save your business from $10k+ of losses.

Interested in learning more about a solution that could be right for you? Reach out to our dedicated fraud prevention team.