Distinguish false-vehicle schemes, false-theft schemes, and inflated-theft-loss schemes.

Question

What will be an ideal response?

Answer 1

False-vehicle schemes are particularly prevalent where insurance companies are lax or have ineffective programs to verify the existence of a vehicle before issuing an insurance policy. As a general rule, this type of fraud is planned well in advance of obtaining insurance coverage. The criminal purchases a policy that has a provision covering loss by theft. In fact, the vehicle does not exist except on paper, has already been salvaged, or does not belong to the person who buys the insurance. Most often, the vehicle insured is a recent model. Sometime later (generally within three months, to hold down the cost of the insurance coverage purchase), a theft report is filed with a law enforcement agency, and a claim is made to the insurance company.
As opposed to the many different fraudulent schemes in which no vehicle exists, in a false-theft scheme, the vehicle does exist and is in fact owned by the person who has obtained the insurance policy. The primary reason why an owner would file a phony theft-loss is generally either to avoid liability for some conduct that resulted from the use of the vehicle or to reduce or avoid some financial loss. The specific motivation leading to the filing of the fraudulent claim may exist at the time the policy coverage is obtained or may result from circumstances that develop later.
In contrast to the preceding schemes, in the inflated-theft-loss scheme the vehicle actually exists, actually belongs to the insured, and actually is stolen. The fraud occurs when the insured makes a false claim concerning the physical or mechanical condition of the vehicle when it was stolen; actually causes some damage or removes some parts on recovery of the vehicle but before it is inspected by the insurance company; claims there were expensive parts on or improvements made to the vehicle before it was stolen; or, if no follow-up inspection is conducted by the insurer, claims certain damage occurred that actually did not happen.