NEW YORK—Synthetic identity fraudsters are primarily targeting the auto industry, leading to a 98% increase in attempts and a “staggering” $7.9 billion in losses for the industry in 2023, a new study reveals.
Point Predictive is reporting its study of 180 million loan applications found income and employment misrepresentation, synthetic identities, and credit washing account for nearly 75% of the risks faced by auto lenders, Bank Info Security reported.
“Typically associated with first-party fraud, these misrepresentations involve borrowers committing fraud rather than third-party scammers. While identity theft accounted for 14% of all risk in 2023, it represented only a fraction of the overall challenges hitting auto industry lenders,” Bank Info Security said, citing the report.
Risks Grow
According to the report, as more lenders and dealerships move application processes online, they face risks that already plague online merchants—fake identities, fraud as a service, and application bots that can apply for many loans simultaneously.
Other challenges identified in the report include the proliferation of sophisticated credit repair schemes such as premade credit privacy numbers, or CPNs; credit washing; fictitious employers and the sale of fake primary tradelines, Bank Info Security explained.
‘Steady Increase’
“The study shows a steady increase in the rate of synthetic identity fraud. By the fourth quarter of 2023, the average synthetic identity attempt rate increased to 83 basis points, indicating that a fictitious credit profile was submitted in one of every 120 auto loan applications,” Bank Info Security reported. “Multiple factors leading to the explosion of synthetic profiles include the growing use of stolen identities, a shift of synthetic ID fraud from other industries into the more lucrative auto financial space, and an increase in the sale of CPNs to consumers.”
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