Auto Loan Fraudsters Stay Busy

What is hot is hot.

Like the high-performance cars that fraudsters snatch from car dealerships with loans obtained under false pretences.

Many schemers opt for muscle cars, says Frank McKenna, chief anti-fraud strategist for Point Predictive, a tech company that flags crooks who monitor dealership inventory.

“The Dodge Challenger and the Dodge Charger are definitely favorites,” he says of two sporty cars on thieves’ wish lists. “They tend to like muscle cars.”

Some scammers opt for luxury vehicles. “Land Rovers and Mercedes-Benz are popular”, McKenna (photo below left) Wards says. “But surprisingly, regular cars, such as the Toyota Camry, are also targets.”

Point Predictive uses artificial intelligence and data analytics to help lender customers avoid being duped by shady personas providing false credit application information, from forged pay stubs to false identities to bogus work places.

Sometimes offenders act individually, falsifying loan application numbers to become owners of a personal vehicle. Other times, they’re owned by criminal cabals “that go state to state to get fancy cars,” many of which end up being shipped overseas, McKenna says.

Some deceivers of all kinds are aided and abetted by unsavory dealership CFOs who go out of their way to close a deal. It’s rare today. “Most dealers are honest,” says McKenna. “Only 3% have fraud risks that we have detected.”

Point Predictive uses 85 data points in its machine learning system to detect fraud. “We train models to spot patterns,” says McKenna. An example: when someone goes from dealer to dealer, claiming different income from each of them.

One of these detected offenders gave himself a big raise along the way, with his supposed earnings rising from $100,000 to $300,000.

These illicit activities are on the rise, according to Point Predictive’s 2022 Auto Fraud Trends Report.

It details record levels of auto loan fraud attempts in 2021. The company believes it will continue to rise this year.

“The pandemic has laid the groundwork for growing fraud risk in 2021 as fraudsters have learned to use falsified information and identities to benefit from unemployment and paycheck protection programs,” McKenna says.

Auto loan fraud activity was estimated at $7.7 billion last year, “a number that we unfortunately expect to continue to rise,” he says.

Key findings of the report include:

  • More than one in five lenders said fraud was a significant threat to their organization in 2021.
  • False declarations of income, false declarations of employment and synthetic identity were the main contributors to the increase in car credit fraud last year.
  • Over $1 billion in loan application value was linked to fake employers.
  • Fraudulent and falsified pay stubs and bank statements increased by 22% in 2021, due to rising unemployment rates and rising car prices.

Last year, fraud analysts at Point Predictive identified more than 16,641 suspicious loan applications with the common characteristics of job fabrication, income manipulation, synthetic identities and straw borrowing. .

These results represent a 260% increase in identified loan misrepresentations and suspicious loan application activity compared to 2020.

Improved technology makes the modern world go round, but with increased risks. “Digital automation and the shift to digital lending create unique challenges for lenders,” said Tim Grace, president and CEO of Point Predictive.

He cites “the pressure on lenders to expand their automation efforts as Gen Z and Millennials become the majority market.”

Employment misrepresentations have increased nearly 400% since Point Predictive began tracking them in 2019.

Some fake businesses are set up as fake employers who, for a fee, will verify that a loan seeker, who is trying to get one quickly, is working for them.

If these fictitious companies are called, many of them do not give up. Instead, they form new illegal operations.

Fraudsters themselves are often persistent too. Point Predictive spotted one that submitted 96 job applications to different fake employers. The potential value of the loan was over $1.7 million.

Steve Finlay is a retired editor of Wards. He can be reached at [email protected].

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