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Closing the Fraud Gap in Auto Finance: 4 Areas to Focus on

Automakers and financial institutions have made strides in automation, delivery options, online shopping, and faster loan decisions, but these same improvements are opening the door for fraudsters looking to get auto loans and car purchases. It is written.

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Four areas of opportunity for lenders to focus on are:

1. Automation and machine learning: Automation and machine learning have sped up decision-making, but they have also opened the door for fraudsters to quickly submit multiple applications to ‘test the water’. Mike PereiraVice President of Lending Operations, Clearwater, Fla. Mid-Atlantic Finance CompanySaid auto finance news.

“Sometimes building and automating processes creates gaps that fraudsters see as opportunities,” says Pereira. “Scammers learn what works and what lenders see by running applications. They test the waters to see who approves them and who doesn’t.” increase.”

Scammers are also aware that auto lenders have implemented automated decisions to identify data that must be included in order to obtain a car loan, such as FICO scores and certain income levels. Scott EllefsonFraud Specialist VW creditSaid AFNMore.

Pereira said MidAtlantic “was able to find many rogue applications.” [fraud] Since this is an automated process, we missed it on the front end. ”

2. Go digital: Lenders and retailers with a digital presence typically notice a slight increase in the amount of fraud going through their systems. Jessica GonzalezAutomotive Division Director Informed IQsaid recently at the Bank Automation Summit Fall 2022.

Noting that the average fraud rate across Informed.IQ’s portfolio is around 2.25%, it says, “Scammers are becoming more sophisticated and sophisticated, using digital platforms to enable fraud.” “If you’re a digital retailer, he’s ten times more likely to see fraudulent pay slips, not just fraudulent mortgage and loan documents.”

3. Remote Delivery: Car delivery is another way scammers take advantage of options to make the car-buying process more convenient, Sgt. Darren Schlosseroversees vehicle fraud investigations at houston police department.

“Normally, it is not the salesperson who delivers the car to the customer, even if it is a local delivery, even 30 minutes away. It is the porter who delivers the car. It is the only opportunity to identify the person who owns and claims to be. [the purchaser]’, he said, noting that it’s difficult to verify that identities match in online transactions.

4. Credit recovery: Consumers were able to dispute trade lines on their credit reports to help victims of identity theft, but now it’s an opportunity for fraudsters to “repair” consumer credit and apply for auto loans. are inadvertently provided, multiple sources say. AFNMore.

For example, VW Credit finds less than 1% of indirect identity theft claims to be legitimate.

MidAtlantic’s Pereira says lenders can work with fintechs to compare data on a borrower’s credit history and see how many trade lines have disappeared over a period of time to identify potential misstatements. .

Automotive Finance Summit, the premier industry event For auto lending and leasingreturns October 26-28 at Wynn Las Vegas. Find out more about the 2022 event and registration here.

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