Walser was right. Fraud prevention provider Point Predictive, which collects data from a consortium of lenders, flagged more than 16,600 suspicious auto loan applications industrywide in 2021 — up 260 percent from 2020. It recorded more than 18,000 potentially fraudulent applications in 2022, up more than 8 percent.
And three-fourths of auto lenders surveyed in December 2022 and January 2023 by Point Predictive thought fraud would be a larger problem in 2023 than 2022.
Income misrepresentation and synthetic identities were the top two issues on lenders’ minds, and more than half of lenders estimated at least 5 percent of the pay stubs they saw were fradulent, according to Point Predictive.
Walser has found phony pay stubs and fraudulent identities to be common scams, Parsons said. The Walser group had been burned by both types of fraud before launching its training.
“On a fairly regular basis we were getting something related to pay or proof of income that was a problem,” Parsons said.
Such incidents lead to “the worst call that you ever have to make” as a retailer — telling a customer they need to bring back the vehicle.
Walser also had lost a luxury vehicle that had been sent out of state to a consumer who turned out to be using a stolen identity in the loan application.
“It was just a lack of education around it,” Parsons said of that transaction.
“And so, we overcorrected.”
Parsons worked with the group’s learning and development and risk and safety teams to develop a half-day training course for managers and Walser’s centralized finance desk. This widespread training meant “everybody was looking out for each other’s back,” she said. Sales personnel receive an abbreviated form of fraud training as well.
The curriculum drew upon both internal Walser knowledge and input from partner lenders about what red flags dealers might see. Nonprime lenders are particularly supportive of education and very willing to share tips, Parsons noted.
“We bootstrapped it,” she said.
The program has resonated with employees, Parsons said.
“It’s actually my favorite training to do,” she said.
She said graduates of the course have contacted her with reports of possible fraud: “‘I think we’ve got this based on this, this and this from the training.'”
In the first four months of 2022, Walser employees recognized and prevented 37 fraud attempts, saving the company more than $1 million in potential losses, Parsons said.
Walser would have caught some of these fraudsters even without the training, Parsons acknowledged.
“But I do think a good portion of them would not have gotten caught because how smart fraudsters got in the period of time during COVID,” she said.
