June 27, 2003

TO: All Tax Collectors and License Plate Agencies

FROM: Carl A. Ford, Director

Division of Motor Vehicles

SUBJECT: Fraud Detection Reports

We are writing this letter as a follow-up to a presentation at the Spring Conference concerning fraud. Many of you expressed an interest in the tools the department uses to detect fraud. These items are and have been available to you and we encourage you to utilize them to their fullest.

First, let us stress once again how critical it is that we maintain optimum levels of security when using FRVIS 2000. Each user has a unique logon. Privacy regarding their user logon and password is a MUST. We cannot stress enough how important it is not to share passwords with co-workers or others for any reason. When this confidential information is compromised, you must notify the department to modify your password immediately.

Each user must have a valid user ID and password. This ID and password must be recorded in the security logon screen. When a valid logon is provided, the system will return roles and access rights for the specific user. Failure to provide a valid logon ID and password takes the user back to the security logon screen.

The system records vital information based upon user logon IDs and passwords. For every transaction, the system records who is processing the transaction, on what date, at what time and the specific actions taken.

Following these simple guidelines will protect the user from having fraud committed using their ID and will assist managers in detecting fraud.

Initial Registration Fee

Let’s remember this particular fraud is perpetrated frequently. The clerk simply collects the fee, voids the transaction and reprocesses exempting the fee. The customer doesn’t catch on because they are handed the original receipt, which indicates the $100 fee.

The Initial Exempt Detail Report tracks those transactions performed by clerks in an agency that results in the $100 Initial Registration Fee being exempted. Each transaction shows the user-ID and which particular exempt code he/she uses to process the transaction.

Verifying the Initial Exempt Detail Report against the Void Report will assist managers in detecting irregularities or patterns.

Transactions Where Decals Are Printed More Than Once

The Transaction Where Decal Printed More Than One Report is a useful tool in that it indicates that two decals were issued on the same license plate on the same day. This can be useful in detecting if the clerk needs additional training and can be an indicator of fraud.

The clerk issues a decal, then when the system asks the question, "Did registration print successfully?" they answer "No" and a second decal is issued. They hand the customer the decal, then void the transaction and hand the manager the decal and the voided work. All title, taxes and registration money can then be pocketed.

As a side note: If the clerks answers "Yes" and then processes a reprint, Void will appear on the decal so the likelihood of fraud decreases considerably.

Registration Shortening

Another type of fraud that can be detected using the Transaction Detail Report in conjunction with the Void Transaction Detail Report is "Registration Shortening." In this scenario, a clerk processes a transaction for 15 months, then voids and reprocesses for 3 months.

In the three scenarios we have outlined for you, Initial Registration Fee Exemptions, Reprinting Decals, and Shortening Registrations, the preferred method of payment has been cash.

These types of transactions don’t necessarily equate to fraud; however, many investigations have indicated that these combinations tend to be the ones used to commit fraud.

Productivity Reports

The Productivity Report is another instrumental report that enables the agency supervisor to monitor the clerk’s total productivity for a period of time. The report lists the transaction type, number of transactions, voided transactions, and committed transactions.

This report will assist in identifying a clerk that processes certain transactions more than other clerks, i.e., title corrections, registration corrections, etc. It will also assist in indicating if the clerk is processing combination transactions on the same title or license plate number.

Verification

Lastly, a third person that does not process transactions, i.e., a bookkeeper, title audit clerk, etc., should verify the transactions of managers who do process transactions. They should also examine the reports listed above. A few moments each day to review these reports can protect consumers from fraud and save taxpayers millions of dollars.

If you have any questions on the subject of these reports, please contact Julie Comer at 1-888-529-1780.

CAF/jwc