PointPredictive is actively looking for more financial institutions to join its Automotive Lending Fraud Consortium, which is an industry collective aimed at tackling the problem of auto and powersports fraud through collaboration, Frank McKenna, chief fraud strategist for the solutions provider, told Powersports Finance.
Historically high lending volumes are fueling an estimated $6 billion in annual fraud losses to lenders, according to a company press release. The consortium aims to bring together lenders in the space to meet on a quarterly basis and share fraud data and experiences.
The consortium last met in April at an Automotive Fraud Roundtable in Dallas, Texas, hosted by Santander Consumer USA. During that meeting the lender group expanded to include six of the nation’s top 10, and nine of the nation’s top 20, lenders, according to the release.
Now, PointPredictive is scouting for new lenders to join, in hopes of potentially doubling the network by next quarter’s meeting.
“We are in discussions, in various stages, with 25 of the top lenders in the country,” McKenna said. “Only a handful of the lenders we work with operate in powersports — a majority are bigger lenders focused on auto,” he said, adding that three lenders operate in powersports.
While McKenna declined to offer names of the lenders involved, he said the lenders offer a mix of direct and indirect as well as prime, nonprime, and subprime lending.
Consumer fraud in particular — such as identity theft — has been an ongoing and increasing problem in the powersports and auto finance space.
“All the lenders in attendance reported that auto lending fraud is a growing concern in their organizations and that they are bolstering their defenses in response,” Tim Grace, PointPredictive’s chief executive, said in the release. “We are providing a critical missing piece to those lenders’ fraud defenses. With the consortium, we’re enabling lenders to share their patterns of auto lending fraud through predictive application risk scores and dealer risk scores — just like other industries have been doing for years. It’s almost impossible for a lender to make a big dent in their fraud losses working in isolation.”
About 10 years ago, the PointPredictive team established the Mortgage Fraud Consortium, which helped cut fraud in half in that industry within 24 months of adoption, McKenna said in the release. “It’s an enormously powerful technique because it not only reduces fraud and early payment default losses — where fraud is often mistakenly classified — but it can detect more fraud while reducing false positives, compared to currently-used tools like Bureau Alerts.”