Synthetic identity fraud, which has increased as the pandemic has forced the switch to digitalization, continues to worsen as fraudsters gain confidence.
This type of identity theft uses a consumer’s real name and date of birth associated with a fake social security number. The combination of real and fake information allows scammers to pass most identity checks and gain access to funding.
As synthetic identity fraud becomes more prevalent in the auto finance industry, crooks are gaining confidence in their ability to produce credit scores between 720 and 780, Naftali harris, general manager of SentiLink, a fintech that detects and blocks fake identities, said Auto finance news. However, these scammers are 10 times more likely to default – 24.9% more likely to default in the first year with an average fee of $ 5,300, according to SentiLink, which collected data on more than 250,000. commercial lines from 2018 to 2020.
“Those [scammers] are the ones who really knew what they were doing and went out of their way to get a good credit score, ”Harris said. “The reasons why these [rates of delinquency] are so much worse, it is the fraudsters who are the most brazen.
Lenders can combat fraudulent activity during the application process by focusing on linking the consumer’s name and date of birth to the social security number, Harris said. A specific red flag to watch out for are randomly assigned Social Security numbers that have been issued within the past 15 years that do not match the person’s age.
In addition to physically monitoring deviations in the application process, lenders can also take advantage of technologies that flag anomalies, request additional documents from the consumer, and look beyond the credit report, Harris said. “Even if they have a credit report and the identities match, if that basically doesn’t make sense, that’s something [lenders] need to look, ”he said.
This year’s fraud losses are expected to increase 6.85% year-over-year to $ 7.8 billion, with identity fraud accounting for $ 1.2 billion. Predictive Point Chief strategist Frank McKenna said previously APN.
While lenders can implement practices to combat synthetic identity fraud, they should also be aware of other ploys plaguing the industry, including unemployment fraud and credit washing programs, McKenna noted. .
Auto Finance Summit, the industry’s premier event, returns October 27-29 in Las Vegas. The Summit continues to bring together the best and brightest in the industry year after year for unprecedented networking and professional training. To learn more about the 2021 event and to register, visit www.AutoFinanceSummit.com.