Auto-Loan Scammers Staying Busy

What’s hot is hot.

Such as hot performance cars that fraudsters wrangle from auto dealers through loans obtained under false pretenses.

Many of the schemers go for muscle cars, says Frank McKenna, chief anti-fraud strategist for Point Predictive, a technology firm that red-flags wrongdoers eyeing dealership inventory.

“The Dodge Challenger and Dodge Charger are really favored,” he says of two sporty cars on thieves’ wish lists. “They tend to like muscle cars.”  

Some scammers go for luxury vehicles. “Land Rovers and Mercedes-Benzes are popular,” McKenna (pictured, below left) tells Wards. “But surprisingly, ordinary cars, such as the Toyota Camry, are targets, too.”

Frank McKenna Point Predictive

Sometimes offenders act individually, fudging loan application numbers to attain personal vehicle ownership. Other times they belong to crime cabals “that go state to state getting luxury cars,” many of which end up shipped overseas, McKenna says.

Some garden-variety deceivers are aided and abetted by disreputable dealership finance managers who do whatever to close a deal. That’s rare today. “Most dealers are honest,” McKenna says. “Only 3% have fraud risks we’ve detected.”

Point Predictive uses 85 data points in its machine-learning system to spot fraud. “We train models to spot patterns,” McKenna says. An example: when someone goes from dealer to dealer, claiming different incomes at each of them.

One such detected offender gave himself a hefty raise along the way, with his supposed earnings going from $100,000 to $300,000.

Such illicit activities are on the rise, according to Point Predictive’s 2022 Auto Fraud Trends Report.

It details record-high levels of attempted vehicle loan fraud in 2021. The company believes it will continue to increase this year.

“The pandemic laid the groundwork for rising fraud risk in 2021 as fraudsters learned to use falsified information and identities to benefit from unemployment and paycheck protection programs,” says McKenna.

Auto-loan fraud activity was estimated at $7.7 billion last year, “a number we, unfortunately, expect to continue rising,” he says.

Key findings of the report include:

Point Predictive’s fraud analysts last year identified more than 16,641 suspicious loan applications with the common characteristics of employment fabrication, income manipulation, synthetic identities and straw borrowing.

These findings represent a 260% increase in identified loan misrepresentations and suspicious loan application activity compared with 2020.

Improved technology makes the modern world go around, but with increased risks. “Digital automation and the move to digital lending is creating unique challenges for lenders,” says Point Predictive Chairman and CEO Tim Grace.

He cites “pressure on lenders to expand their automation efforts as Gen Z and Millennials become the majority market.”

Employment misrepresentation has grown almost 400% since Point Predictive first started tracking it in 2019.

Some bogus companies are set up as fake employers that for a fee will verify a loan applicant, who is trying to pull a fast one, works for them.

If these fictitious businesses are called out, many of them don’t give up. Instead, they form new illegal operations.

Fraudsters themselves often are persistent, too. Point Predictive spotted one who submitted 96 applications with different fake employers. The potential loan value was more than $1.7 million.

Steve Finlay is a retired Wards senior editor. He can be reached at [email protected].