Mercedes-Benz to launch new fraud-prevention tool

Mercedes-Benz Financial Services USA is developing a tool to stop the automatic approval of auto loan applications with a high risk of fraud. The tool will check new applications against confirmed fraud cases to predict the riskiness of the application, Dawn Carpenter , chief risk officer at Mercedes-Benz Financial Services USA, told Auto Finance News today. Applications are then assigned a risk score, she said. “The system will flag applications that share suspicious linkages or behavioral patterns associated with known fraudulent activity, helping us take proactive action before funding,” she said. The tool will also identify common red flags of synthetic fraud , Carpenter said, which her and other experts said include: Having three or fewer trade lines; Having an 800 FICO score; and Putting $10,000 down on a vehicle. Bust out fraud Fraud cost auto lenders $9.2 billion in 2024 , up 16.5% year over year, according to a March 25 report from risk management platform Point Predictive . Fraud tools aim to mitigate against cases such as bust out auto fraud schemes , in which borrowers who falsely appear creditworthy take out car loans and then sell the vehicles overseas before they hit the fraudster’s credit report. Capenter gave an example of a fraud ring in Southern California, during an Oct. 17 panel session at Auto Finance Summit 2025 in Las Vegas. It was difficult to discern the fraud potential due to the loan applicants’ credit profiles, she said. “They were all people that put $10,000 down on the vehicle,” she said. “They had 800 FICO [scores]. They had five [to] six years of history because they were people who had been in the country.” Assigning risk The new Mercedes-Benz Financial Services USA tool will be used to identify information used in previous fraud attempts, Carpenter said at the summit. “Some of the fraudsters are using that same email address over and over, or that same phone number … but they’re changing the name or changing the address,” she said. “That’s something we’re really diving into.” Once an application’s risk score “exceeds a defined threshold, it is automatically removed from auto-approval eligibility,” Carpenter said today. That application will also go directly to Mercedes’ fraud team for manual review. “This automation streamlines the process, accelerates detection and reduces the chance of potential fraud slipping through early in the workflow.” — Dawn Carpenter, Mercedes-Benz Financial Services USA CRO Carpenter did not provide a timeframe for the tools’ completion. Internal, external education The goal of integrating a fraud mitigation tool into the loan origination system is, in part, to ensure that potentially fraudulent loans are assessed by a fraud team before a retail credit analyst decides, Carpenter said today. However, the captive also hosts regular post-mortems, or reviews after fraud occurred, with Mercedes’ retail credit analysts and collections agents to make sure everyone is educated on the latest fraud trends, she said at AFS. “Let’s review the trends. Let’s look at specific deals. Let’s see if there’s something that we can do to identify it and learn together,” she said. Nissan Motor Acceptance Co. also hosts monthly reviews with its departments to look at first payment defaults manually to see if any losses were instances of fraud, Senior Fraud Analyst Dennis Pleasant said during the session at AFS. “Technology is great, but you have to do due diligence when you’re looking at items to see if it’s something that’s there and [use] your expertise to try and stop these accounts from getting on the books.” — Dennis Pleasant, Nissan Motor Acceptance Co. Externally, lenders can also work to educate their dealer partners , Anthony Capizzano , senior vice president and head of consumer lending at Axos Bank , said during the session at AFS. “It actually made the relationship a little bit tighter,” he said. “Help dealerships get educated, and they will look for it the next time. Oftentimes, you are one of their best sources of education on this.” Stay up to date on all the news coming out of Auto Finance Summit 2025 here .

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