Since 2019, Scammers Have Taken Out $1B in Fraudulent Auto Loans

Since 2019, Scammers Have Taken Out $1B in Fraudulent Auto Loans

A newly-purchased car or even a used car is a thrilling experience for most of us. Going from a prospective buyer to becoming a proud owner is an exhilarating experience, and for some, that excitement is so overwhelming that they submit fraudulent loan applications. 

More than $1 billion worth of auto loans have been applied for since 2019.

Point Predictive identified over 5,000 unique fake employers listed on these fraudulent applications in a new report. Prospective buyers use false employment history, pay stubs, payment history, and more to get approval for high-dollar loans.

In some cases, criminals are actively and intentionally working with companies that create fake documents, posing as credit repair agencies.

According to a statement from Point Predictive’s senior fraud analyst Justin Hochmuth, the growing threat posed by fake employers on credit applications is astounding.

The firm expects to receive around $7 million in fraudulent loans each month by early 2019. The number is now over $35 million. 

There is no doubt that some of this growth has been influenced by the massive jump in used car values seen over the past two years, but new cars haven't been affected in the same way.

Thus, both the number and value of fraudulent loan applications rise. Since it's overgrowing, it's impossible to catch every criminal before the sale is completed.

Each week, Point Predictive uncovers around 100 fake employers, and 30% of those submitting fraudulent applications default on their loans. Over half of those individuals defaulted within six months or almost immediately.

Dealers are not entirely helpless, however. Their business will be busiest in the next few months, and they can actively use Point Predictive's 'Employer Check' page to check if an application is legitimate.