HiGear, a peer-to-peer, luxury car-sharing company in San Francisco, announced this week that it is shutting down after four vehicles were stolen from customers, according to TechCrunch.com.

The company model required background and license checks, and then owners physically handed over their keys to renters after checking the license. This method did not, however, prevent from identity fraud.

Though the company had recently expanded to Los Angeles and was planning an expansion to Portland and San Diego, the company wrote in an email to its customers:

“Last month 4 cars were stolen on HiGear by a criminal ring. The total value of these cars was around $300,000. While our insurance is processing the claims for reimbursement, and the police have since recovered some of these cars, this incident involved sophisticated criminals using identity theft, stolen credit cards and stolen IDs to bypass all the background checks that we had put in place. This incident exposed us to the worst-case risks inherent in our service. Even by improving security and processes, we are not completely sure we can prevent an incident of this sort from happening again given the peer-to-peer nature of our service. It is difficult to eliminate identity fraud completely on the internet. Companies like Amazon, Google and Ebay lose millions each year because of it. However when you compound that with the sum of large losses (the average HiGear car is worth $70,000), it creates an untenable situation.”

The luxury car-sharing service reported that it had around 5,000 members and 300 cars listed. For the full article from TechCrunch, click on the URL: http://techcrunch.com/2012/01/01/luxury-car-sharing-service-higear-shuts-down-due-to-theft/

Go to www.higear.com to see the company website, which is still live.