Auto Loan Fraud Accelerating at Credit Unions

Peter Strosniak with Credit Union Times wrote a great article on Auto Lending Fraud and how it impacts Credit Unions.  Credit Unions are often the target of sophisticated fraudsters looking to take advantage of the “friendlier” customer approach that credit unions are known for.

You can read the article here – Auto Loan Fraud Accelerating at Credit Unions.

“What we’re seeing is that fraud in the U.S. is moving to easier targets,” Lasher said. “Recent trends indicate that application fraud is an easier target because of the proliferation of identity data that’s available for purchase out there. Auto finance is a prime target because the barriers and layers of control and the sophistication level of control are less than what we’re seeing in some other organizations.”  Elizabeth Lasher, Director of Fraud FICO

One of the biggest issues for credit unions is the rising problem of Synthetic Identity fraud which is hitting the auto lending industry particularly hard.

Fraud rings create synthetic IDs by using a Social Security number that a lot of times may belong to a minor who doesn’t have an established credit history. They pair that Social Security number with a fake name and fake address, and may also create bogus utility bills or other documents to convince financial institutions that they are the person who lives at that specific address. Then, to establish a good credit history and credit score for the synthetic identity, the fraudsters use credit cards to make small purchases and pay off the cards monthly.

They pair that Social Security number with a fake name and fake address, and may also create bogus utility bills or other documents to convince financial institutions that they are the person who lives at that specific address. Then, to establish a good credit history and credit score for the synthetic identity, the fraudsters use credit cards to make small purchases and pay off the cards monthly.

Then, to establish a good credit history and credit score for the synthetic identity, the fraudsters use credit cards to make small purchases and pay off the cards monthly.

Fraudsters prefer this method and are operating in huge crime rings operating out of Chicago, Miami, and Houston.  The fraud rings recruit people off the streets to take part in credit repair scams that ultimately lead to the individual going into an auto dealership to steal cars with these fictitious identities.

Frank McKenna is the Chief Fraud Strategist for PointPredictive and a Fraud Consultant based in San Diego California