Spring Labs Reduces Consumer Loan Fraud Using New Data Network
MARINA DEL REY, California, December 16, 2020 / PRNewswire / – By enabling market participants to share information without disclosing competitive data, the financial technology provider Spring labs announced today that its new network among market players has facilitated substantial reductions in a key type of fraud in the consumer loan segment known as Property Assessed Clean Energy (PACE) loans.
By allowing a lender to learn from other lenders if they are approving a loan to the same borrower, but with all parties maintaining strict confidentiality about their lending activity, and Spring labs itself not having access to the underlying data – lenders on the Spring platform are able to stop a fraud known as privilege stacking, i.e. a borrower is simultaneously approved for loans from multiple lenders.
“This is a great example of how technology is enabling the future of secure data exchange in financial services,” said Adam jiwan, co-founder and CEO of Spring labs. “By allowing market participants to share sensitive information securely and anonymously, our system enables otherwise competitive businesses to work together to achieve common goals, such as reducing fraud.”
The PACE residential lending sector, which currently operates in California, Florida, and Missouri, funded more than $ 6 billion cumulative loans and an annual loan volume of $ 1 billion. PACE loans are used for clean energy upgrades such as solar panels and high efficiency HVAC systems, and the loans are then repaid through property tax bills.
Spring Labs network technology is based on modern cryptography, which allows for strict control of the visibility of information shared by network participants, and an authorized blockchain, which provides a timestamped and immutable record and audit trail to all participants. of the network. This combination of data opacity and transaction transparency is a key to solving the age-old problem of information sharing between competitors.
On a large scale, this type of anonymous information sharing network could significantly disrupt existing centralized data aggregation business models, which can be found across the financial services industry.
In a common PACE loan fraud scenario, a contractor submits a renovation project to multiple lenders simultaneously. By reviewing historical property tax data, each lender can approve the project and release the funds to the contractor. Fraud is often not detected until a year later, when the homeowner receives a tax bill with multiple PACE loans. Average project sizes are $ 25,000–$ 35,000, with lenders generally absorbing the entire loss. Thanks to the Spring network, fraud is detected before funding.
Currently, lenders representing approximately 75% of the industry’s financing volume are on the network. Based on its proven track record in fraud detection, other participants are currently completing the onboarding process, which will bring the PACE residential industry participation to almost 100%.
The Spring Network detected an attempted fraud hours after the beta launch in July and has regularly detected fraud since. “It’s unfortunately quite common for a contractor to try to stack multiple appraisals on the same property,” says Marc Schmidt, COO of PACE Funding. “Spring labs is the only tool available that helps us detect this fraud in real time, making it a critical part of our efforts to both protect the owner and enforce legal funding limits. “
About Spring labs
Springcoin Inc, dba Spring labs, creates and supervises anonymous and decentralized data networks which considerably increase the quantity, quality and security of information available to market players. Spring labs leverages sophisticated cryptographic tools and blockchain technology to provide guarantees of data and metadata integrity, tamper-proof workflows, and privacy-preserving tokenization that enable corroboration of information without the exchange of underlying data. These locking technologies help mitigate fraud, improve verification capabilities, and securely provide access to data previously unavailable in the financial services industry. Situated at Marina Del Rey, California, Spring labs was founded in 2017 by Adam jiwan, Jean Sun, and Anna fridman. Spring labs has around 50 employees and has raised more than $ 38 million from investors such as GreatPoint Ventures, August Capital, GM Ventures and others. Learn more at www.springlabs.com.
Otto Pohl, Basic communication advice, [email protected], www.corecommunicationsconsulting.com, +1.917.915.4400.
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