SAN DIEGO — Thirteen finance sources representing more than a third of U.S. auto finance originations are looking to take a bite out of fraud. They took part in a roundtable last week to discuss ways to expand participation in a consortium aimed at tackling the estimated $6 billion in annual fraud losses.
The Auto Fraud Roundtable was hosted by Santander Consumer USA in Dallas, and was attended by six of the nation’s top 10 and nine of the nation’s Top 20 auto finance sources. They are part of the Auto Lending Fraud Consortium, an industry collective launched by fraud solutions provider PointPredictive. Finance sources that join the consortium agree to share the patterns of fraud in their data and meet on a quarterly basis to share fraud experiences.
“All the lenders in attendance reported that auto lending fraud is a growing concern in their organizations and that they are bolstering their defenses in response,” said Tim Grace, CEO of PointPredictive. “We are providing a critical missing piece to those lenders’ fraud defenses. With the consortium, we’re enabling lenders to share their patterns of auto lending fraud through predictive application risk scores and dealer risk scores — just like other industries have been doing for years. It’s almost impossible for a lender to make a big dent in their fraud losses working in isolation.”
To kick off this next phase of consortium growth, the finance sources in attendance set in motion a plan for enhanced industry collaboration. They established guidelines and a working plan to move forward aggressively to respond to fraud.
“The best way to stop fraud is together as an industry,” said Santander Consumer USA COO Rich Morrin. “We know that individuals and criminal rings work to defraud banks and financial institutions; it’s time we work together to stop them.”
To support the fraud consortium, PointPredictive will play a critical and active role. It will lead the collection of lender data, build machine-learning predictive application risk and dealer scoring, and provide Ph.D. scientists and fraud experts to continuously analyze contributed data for patterns of risk and emerging trends across finance sources. It will also organize quarterly consortium meetings
“Ten years ago, members of the team at PointPredictive established the Mortgage Fraud Consortium,” said Frank McKenna, chief fraud strategist of PointPredictive. “That helped cut fraud in half in that industry within twenty-four months of adoption. It’s an enormously powerful technique because it not only reduces fraud and early payment default losses, where fraud is often mistakenly classified, but it can detect more fraud while reducing false positives — compared to currently used tools like Bureau Alerts.”
The Automotive Lending Fraud Consortium is open to all U.S. auto finance sources. Lenders interested in learning more about the Automotive Lending Fraud Consortium can email Kathleen Waid at [email protected]