Credit Unions Face an Uptick in Auto Loan Fraud
Credit unions are seeing an increase in losses due to auto loan fraud, reports Peter Strozniak in Credit Union Times.
Strozniak report, in the June 09 issue of CU Times, cited research from Frank McKenna, chief fraud strategist for PointPredictive, a San Diego firm that provides machine learning fraud solutions for financial institutions.
The research found that auto fraud losses are expected to hit in the estimated range of $4 billion to $6 billion in 2017.
That’s way up from the estimated $2 billion to $3 billion in auto loan losses in 2015.
“Some fraud is never identified during the application process and not even after the loan has been funded and defaults. In most cases, the fraud results in early or first payment default where the borrower never makes a loan payment,” said Strozniak, in his article
A lot of fraud (40% to 70%) stems from significant misrepresentations on loan applications, PointPredictive found.
Strozniak continued, “While auto loan application fraud is nothing new, the schemes have become much more sophisticated, complex and elaborate, making it more challenging than ever for financial institutions to detect and prevent the fraud.”
Find the full article HERE.
Auto loan fraud hurts credit union members directly, by increasing credit union losses. Countering this fraud could add additional expense and complication to the lending process, making it harder for borrowers to get loans and hurting the ability of CUs to offer auto loans at competitive rates.
Everyone loses, except the criminals.
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