Memphis fastest growing area for synthetic identify fraud

Memphis, Tenn., became the fastest-growing area for synthetic identity fraud in 2023, as fraudsters advertised it on social media in waves. The rate of synthetic identity fraud in Memphis grew 127.3% year over year in 2023 with 0.65% of applications containing synthetic identity fraud, according to Point Predictive ’s 2024 Auto Lending Fraud Trends Report released May 9. . Point Predictive builds predictive models using AI and machine learning to help its customers combat fraud. Locations that have not traditionally been known as synthetic identity fraud hot spots have experienced increased exposure , according to the report. . Charlotte, N. .C.; Columbus, Ohio; and Indianapolis reported YoY growth rates of 85.6%, 73.8% and 72.3%, respectively, in auto loan applications containing synthetic identity fraud. The new wave of exposure indicates that fraudsters are spreading out from traditionally active areas such as Chicago, Houston, Los Angeles and Miami, according to the report. . Synthetic identity fraud is when a person combines real and fake information to form a new identity to defraud institutions. Synthetic identity fraud is targeting the auto industry, Point Predictive Chief Fraud Strategist Frank McKenna told Auto Finance News. “I think it's because the stakes are higher,” he said. “Why use it for a credit card when you can get an auto loan?” Though the emergence of fraud chatter on social media may have generated more fraud in new areas, the highest risk states remained mostly unchanged from 2022, according to the report. . Georgia had the highest risk in 2023 at 564 frauds per capita, after having the second-highest fraud per capita in 2022. The riskiest states were concentrated in the South, which comprised six of the top 10 states with the highest fraud per capita rates. The riskiest states for fraud also tend to be among the states with the highest rates of auto loan delinquency in the fourth quarter of 2023. . Georgia, for example, had the third highest percentage of auto debt balances more than 90 days delinquent at 5.71% at the end of Q4 2023 according to an Auto Finance News analysis of Federal Reserve Bank of New York data. Mississippi, which had the highest percentage of auto debt balances more than 90 days delinquent at 6.77%, has the fifth highest fraud per capita at 504, according to the report. Alabama, which had the second-highest percentage of auto debt balances more than 90 days delinquent at 6.05%, had the seventh highest fraud per capita at 435. Social media boosts fraud As synthetic identity fraud spreads to new areas, so has the emergence of people talking about fraud on social media. . Fraudsters have used social media apps like Telegram to advertise how to create fake profiles with Credit Privacy Numbers (CPN), which are often stolen Social Security numbers used to carry out synthetic fraud, or to sell CPNs using the apps, according to the report. "We saw [fraudsters are] talking about it more; they're sharing it more. . When they share it on social media, it’s happening more,” McKenna said. "The fundamental change I see for auto lenders is that fraudsters are sharing these patterns with each other and it's just creating more fraud.” Mentions or advertisements of CPNs shot up to approximately 250,000 in a month on Telegram in early 2023, according to the Point Predictive report. . Mentions of CPNs on Telegram fluctuated throughout the year but mostly remained above 100,000 mentions a month. . By comparison, CPN mentions hovered at or below 50,000 for all of 2021 and 2022. “There's more chatter around auto lenders on Telegram, so to me what it is saying is auto lenders are more of a target than they ever were before,” McKenna said. [caption id="attachment_58341182" align="alignnone" width="644"] Point Predictive [/caption] Auto fraud activity extends to other social media sites as well, Sgt. Darren Schlosser of the Houston Police Department auto theft division's vehicle fraud unit told AFN . “ Social media is pumping [synthetic identity fraud] like crazy,” he said. “ Instagram , Facebook , all these different places are pumping the CPNs out there." On Instagram, by simply typing in “credit profile numbers” or “credit privacy numbers,” there’s a wealth of accounts offering all kinds of CPN deals for a price, Schlosser said. <a href="https://www.bing.com/ck/a?!&&p=ba15f9f68df8cb68JmltdHM9MTcxNjMzNjAwMCZpZ3VpZD0xOWEwNWRkZS05YTJhLTZiYWEtMjdjNy00OTg1OWI0ODZhZWYmaW5zaWQ9NTIwNw&ptn=3&ver=2&hsh=3&fclid=19a05dde-9a2a-6baa-27c7-49859b486aef&psq=Final+fraud+feature+headline%3a+Inside+the+not-so-dark+web%3a+Exposing+how+credit+repair+schemes+cost+lenders+billions&u=a1aHR0cHM6Ly93d3cuYXV0b2ZpbmFuY2VuZXdzLm5ldC9hbGxwb3N0cy9yaXNrLW1hbmFnZW1lbnQvb3V0LW9mLXRoZS1zaGFkb3dzLWV4cG9zaW5nLWhvdy1jcmVkaXQtcmVwYWlyLXNjaGVtZXMtY29zdC1sZW5kZXJzLWJpbGxpb25zLw&ntb=1" target="_blank" rel="noopener"> Consumers using synthetic identities can build up their credit with the fake profile they acquired from social media or other means, and obtain a credit score of 800, allowing them to make more expensive purchases, he said. . That’s where auto lenders become greater targets. “ What can you buy with an 800 [credit score]? Anything you want,” Schlosser said. “A nonexistent person can be created, get an 800 [credit score] and go spend up to $100,000 before it's discovered. . Why go out there and steal a car when you can go out there and finance a car. . It's not stolen off the lot. . It's not reported stolen. . It might be listed as repo, but it's not going to be listed as stolen in most cases.” The Big Wheels Rankings are now available as a component of the relaunched Big Wheels Data Service, which includes an array of datasets on underwriting, volume, pricing and capital. . The rankings tabulate the Top 100 auto lenders and lessors by originations and outstandings. . See BigWheelsData for details.

Memphis fastest growing area for synthetic identify fraud

Georgia leads in fraud per capita

Under the Hood: The need for an auto finance reboot

Ally Financial eyes AI-based inventory recommendations

Related Posts

‘Synthetic fraud is rampant’: Agentic AI, social media empowers auto scams

Beige Book: Higher car, gas prices contribute to mixed sales performance

Retail used-EVs days’ supply falls below overall market at 31.2 days

Credit unions say inflation is top concern amid portfolio growth

Ally Financial eyes AI-based inventory recommendations

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Why credit unions give dealers an edge in today’s auto market

Driving better decision-making across auto finance operations with SAS

Auto finance’s first line of defense: Raising the standard in integrated software partnerships and data strategy

Retrieve your password