Synthetic identities: 1 in 5 have auto loans

More than 1 in 5, or 22%, of false identities created to carry out fraud are connected to auto loans, according to fresh data from SentiLink , a fintech company that detects and blocks synthetic identities. For the report, the company looked at 1,400 synthetic identities. The fintech defines synthetic identity fraud as a case in which the name, date of birth and Social Security number do not match a real person. With first-party synthetic fraud, the applicant's name and date of birth refer to a real person, but the Social Security number does not. Cases in which the name, date of birth and Social Security number are all tied to a fictitious person are considered third-party synthetic fraud. Fraudsters aiming to set up an auto loan using a false identity are more likely to go the first-party route, according to SentiLink, which found that 96% of synthetic identities in auto are considered first-party fraud, as compared with overall synthetic fraud, of which 79% are first-party fraud. Since the majority of synthetic fraud in the auto lending space is done through first-party fraud, it poses a major problem for auto lenders, who typically verify a borrower’s credit application by comparing the name and date of birth to a driver’s license, which does not list a Social Security number, Max Blumenfeld, co-founder of SentiLink, told Auto Finance News . Lenders may pull the wrong credit report, which can lead to an inaccurate reflection in charge-offs, making it “look like a credit problem, when it’s really a fraud problem,” Blumenfeld added. Lenders can proactively prevent those loses by also verifying the Social Security number. In 2019, fraud accounted for a $7 billion loss for the auto finance industry, a problem exacerbated by the rise in digital processes due to the COVID-19 pandemic, Todd Wolf, chair of the International Association of Financial Crimes Investigators ’ Auto Finance Coalition, said during a presentation at the most recent Auto Finance News Auto Finance Risk Summit. “Everything can be delivered to them to the mail or to a remote site. Fraudsters find it easier to commit auto fraud schemes versus having to go into a dealership,” Wolf said. Synthetic identify fraud specifically accounts for a nearly $1.4 billion problem for the auto finance industry, Wolf said. “Synthetic identity is the fastest growing form of any type of identity fraud. It’s estimated that 85% of all forms of identity fraud are a form of synthetic identity,” he said. “It takes longer for anybody to identify, especially if you are a victim and your Social Security number might have been compromised.” Auto Finance Summit, the premier industry event, returns October 20-22, 2020, as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2020 event and register, visit www.AutoFinanceSummit.com .

Synthetic identities: 1 in 5 have auto loans

Massachusetts AG probe signals heightened scrutiny of subprime sector

Weekly Wrap: Regulators step up enforcement

Related Posts

US job growth surges past estimates; unemployment dips to 6.2%

EVs could make dealerships a thing of the past, too

Self-insurance, blanket coverage or CPI: Which is better for your auto loan portfolio?

Weekly Wrap: Regulators step up enforcement

INNOVATION & TECHNOLOGY

Midwest BankCentre to grow auto book with digital refinance

Auto refinance enters the spotlight

CORONAVIRUS

Powersports marketplace provider Rollick secures $8.5M in funding

Q4 brings positive delinquencies, mixed originations for auto finance

SPONSORED

Self-insurance, blanket coverage or CPI: Which is better for your auto loan portfolio?

Collateral Protection Insurance (CPI): What is CPI and what does it do?

Driving Customer Loyalty, Retention After Total Loss

About

Contact Us

Follow Us

Synthetic identities: 1 in 5 have auto loans

Already subscribed? Log in below.

Massachusetts AG probe signals heightened scrutiny of subprime sector

Weekly Wrap: Regulators step up enforcement

Related Posts

By subscribing you agree to our Terms of Use and Privacy Policy

CORONAVIRUS

SPONSORED

About

Contact Us

Follow Us