A Tale of Two Frauds

Two Types of Fraudsters

All fraud is bad, right? Well…kind of.

Point Predictive owns and operates the largest auto lending fraud consortium on the market. Housed within the consortium is information on more than 94 million applications (growing by 2MM/month), and $2.4B worth of fraud and misrepresentation

Throughout 2020, Point Predictive noticed a 300% increase in employment related fraud, driven by a dramatic rise in the use of fake employers.

Could this be fraudsters shifting behavior because they see that using fake employers lead to high success rates, or could this trend have been driven by everyday consumers hit hard by COVID?

When analyzing these fake employers there were interesting patterns discovered within the vehicle data. This atypical behavior helps explain the differences in first-party fraud (Fraud for Car) and third-party fraud (Fraud for Profit).

But what is the difference?

  • First-Party Fraud – Otherwise known as Fraud for Car, is when fraud is being perpetrated by the real person. The borrower typically misrepresents information on their application in order to obtain the car. In most cases they has every intention of making payments.

  • Third-Party Fraud – Otherwise known as Fraud for Profit, is being perpetrated by the criminal fraudster. This usually involves some form of identity theft, and is done with the sole intent to make a profit. The fraudster has no intention of paying back the lender.

What Point Predictive identified is that, although these first-party fraudsters are using a completely fake employer, they are typically paying back the lender for that car purchase.

So this begs the question: If there is no loss to the lender, did fraud really occur?

I further explain the differences between the two types of fraud in my first ever e-book, A Tale of Two Frauds. If interested, it can be downloaded below:

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