Lending fraud is a complex and ever-evolving issue that affects both lenders and borrowers. With new schemes and tactics constantly emerging, it’s essential to stay informed and vigilant. Point Predictive has developed a comprehensive Lending Fraud Glossary to help you understand and recognize these deceptive practices.
Let’s put your knowledge to the test! See how well you know these fraud terms and their implications.
Quiz: How Well Do You Know Lending Fraud?
- Which term describes the use of fabricated or stolen information to create a new identity for fraudulent activities?
- a. True name identity theft
- b. Synthetic identity fraud
- c. Collateral fraud
- What is it called when a borrower uses bad checks to pay down or pay off a loan with the intention of selling the collateral before the check bounces?
- a. Ghost down payments
- b. Artificial paydown
- c. Employer Recycling
- Which type of fraud involves a dealer misrepresenting borrower data to lenders to sell more cars?
- a. Auto dealer fraud
- b. Straw borrower
- c. Powerbooking
- What do you call the process of systematically disputing all negative tradelines on a credit report by filing false affidavit with the FTC?
- a. Performing synthetics
- b. Credit washing
- c. Fraud as a service
- What is the term for fraudsters who repeatedly hit lender after lender with different identity attributes?
- a. Frequent fraudster
- b. Shell persons
- c. Criminal synthetics
Answers and Explanations
- b. Synthetic identity fraud
- Synthetic identity fraud involves creating a new identity using a mix of real and fabricated information. This type of fraud is particularly dangerous because it can go undetected for long periods.
- b. Artificial paydown
- An artificial paydown occurs when borrowers use bad checks to temporarily reduce or eliminate a loan balance. They then sell or trade the collateral, such as a car, before the check bounces, deceiving both the lender and the loan originator.
- a. Auto dealer fraud
- Auto dealer fraud includes various tactics used by dealers to misrepresent borrower information to secure more sales. Common examples are powerbooking and ghost down payments.
- b. Credit washing
- Credit washing is the process where an individual disputes all negative tradelines on their credit report by falsely claiming identity theft, resulting in a temporarily improved credit score.
- a. Frequent fraudster
- A frequent fraudster is someone who repeatedly commits fraud by using different identity attributes to deceive multiple lenders over time.
How did you do on the quiz? Whether you aced it or found some areas for improvement, staying informed about lending fraud is crucial. Point Predictive’s Lending Fraud Glossary is a valuable resource for anyone looking to deepen their understanding of these deceptive practices.
By familiarizing yourself with these terms, you can better protect yourself and your business from potential fraud.
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