- Reports $400 million increase in fraud exposure to auto lenders last year
- More than 10,000 fake employers associated with an eye-watering $3.1 billion in fraudulent loan applications
- Stimulus-era fraudsters shift focus from government loans to auto loans
SAN DIEGO, CA – June 13, 2023 – Point Predictive, the leader in artificial intelligence (“AI”) and machine learning (“ML”) fraud solutions for the lending industry, is pleased to announce the release of its highly anticipated 2023 Auto Lending Fraud Trends Report.
Leveraging over 23 billion unique risk attributes spanning more than $2.6 trillion in scored applications, the report presents an in-depth examination of auto lending fraud trends over the past year.
At the heart of Point Predictive’s analysis lies its proprietary derived data repository, which aggregates AI and ML-generated data insights from Point Predictive’s consumer data and third-party sources. This lender-deidentified resource encompasses a staggering 23 billion risk attributes, covering both credit-visible and credit-invisible populations. With a nationwide reach, this unique data source drives Point Predictive’s models and solutions and is the basis of its 2023 Auto Lending Fraud Trends Report.
Key findings of the 2023 Auto Lending Fraud Trends Report include,
- To date, up to 1 million new fraudsters became active in 2020 after economic stimulus programs were launched. In 2022, we saw a subsequent shift towards fraudulent vehicle financing.
- The auto lending industry faced over $8.1 billion in origination risk exposure in 2022, representing a $400 million increase compared to the previous year.
- Synthetic identity and identity theft have increased by 45% since 2018, with synthetic identity fraud rising by 12% in 2022 alone. The estimated total identity risk for the year reached $2.3 billion.
- Affordability risk has risen by 52% since 2018, reaching its highest level, leading to increased stress on borrowers and higher early payment default rates associated with fraud.
- Traditional forms of fraud, such as income, employment, and straw borrower fraud, decreased in 2022. However, professionals continuing to engage in income and employment fraud are utilizing more sophisticated tactics, including well-hidden fake employers and advanced paystub forgeries.
- New fraud schemes, such as Zombie Debt Reassignment, have emerged that feature highly disguised fake tradelines and require constant improvement of strategies, operations, and technological responses to combat evolving fraud patterns.
“To truly understand fraud, you must look at many details in the data submitted on the applications to lenders and dealers. Looking at that data in aggregate, you can precisely identify how fraud trends are changing over time. That is what we do with our annual fraud report each year – expose those trends to the industry,”
said Frank McKenna, Chief Fraud Strategist at Point Predictive.
“We look at billions of data points from applications and then tie that back to what gets reported as fraud, early pay default, as well as what red flags existed at the time of scoring. With this networked and holistic view of auto risk across the industry, we can provide a unique perspective of how risk is trending.”
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About Point Predictive
Headquartered in San Diego, California, Point Predictive powers a new level of lending confidence and speed through artificial intelligence, powerful data insight from our proprietary data repository, and decades of risk management expertise. The company’s data and technology solutions quickly and accurately identify truthful and untruthful disclosures on loan applications. As a result, lenders can fund the majority of loans without requiring onerous documentation, such as paycheck stubs, utility bills, or bank statements, improving funding rates by 40-50% while reducing early payment default losses by more than 30-50%. Subsequently, borrowers get loans faster, and lenders realize a more profitable bottom line. For more information, please visit www.pointpredictive.com.
