Lenders Concerned about Loan Frauds and Defaults

According to Point Predictive’s 2023 Auto Lending Survey, lenders are growing increasingly concerned about loan fraud amid the worsening economic conditions.  The survey reported that 70% of auto lenders are expecting an economic recession this year.  Lenders also reported concerns about fraudulent practices such as income misinterpretation, synthetic identity risk, dealer fraud, and pay stub forgery.

Other key concerns found in the report include that 25% of lenders reported they are not tracking fraud as soon as it occurs, 35% of lenders said their front-line employees were not trained to investigate or identify fraud, and that only 30% of lenders reported using the U.S. government’s fee-based electronic system to confirm the legitimacy of borrowers’ SSNs.

The current economic climate has led to credit tightening and increased security from lenders as they are looking at the highest-quality loans they can book and are booking lower volumes.