Some car shoppers are trying extreme measures to secure financing, going all the way to fraud. Point Predictive, a research company reliant on machine learning, says it uncovered over 5,000applications tied to fake employers. We’re not talking about applicants simply making up an employer’s name to jot down on a credit application. The schemes are pretty extravagant.
According to the company’s research, published earlier this month, these thousands of applications include a falsified employer complete with a fake website, forged paystubs and other deceptions to pass a credit application. Lenders and dealerships aren’t sniffing these forged applications out nearly as well as they need to, and it’s costing a lot of money, Point Predictive said: The thousands of applications come to about $1 billion in fraud, total.
Unsurprisingly, applications tied to fake employers have incredibly high default rates. The company estimates the default rate at 40% to 100% for someone involved in one of these schemes. For lenders, it pays to catch the web of falsehoods before releasing funds for something as expensive as a vehicle purchase, especially while credit remains highly accessible to borrowers.