In recent months, I’ve spoken to hundreds of lenders who’ve expressed growing concern on the topic of online fraud—specifically loan stacking, synthetic identities and new account originations fraud.
Fraudulent loan stacking involves attempting to secure multiple loans from one or more lenders within a short period of time without intending to repay those loans, and includes an increasing number of borrowers due to continued growth in the personal loan space.
Number of Consumers with Personal Loans Continues to Rise
|Year-end||Number of consumers with a personal loan|
Growth in online fraud, including fraudulent loan stacking, is an issue impacting lenders across the lending spectrum.
TransUnion data found that as personal loan delinquency rates rise, online fraud, which includes loan stacking, continues to make significant contributions to these increases. Personal loans more than 90 days past due, at the conclusion of 2016, rose to 6.22%, up nearly 3% from the year-end 2015 delinquency rates.*
While online fraud continues to present a challenge for lenders, access to robust data assets allows lenders to mitigate the associated risk. The ‘latest and greatest’ technique in identity verification lies in the vastness of data sets—providing insights into behavioral patterns--such as fraud velocity, device ID, email verification, name/address verification, location—now able to gather information about activity occurring across networks and industries, be it auto, credit card, mortgage or personal loans.
We now have the ability to gather nearly 800 data points in under a half-second. Collating and extracting all that data in real time is an extremely powerful asset. When you start mixing so many data elements and get down to micro-ranges, every point brings risk down and lender confidence up.
With that concept in mind, the key to combat new account origination fraud is shared global intelligence. The Fraud Prevention Exchange is a network of industry-leading vendors sharing valuable insights and their experiences.
This collaborative space allows lenders to leverage intelligence with other lenders, which is a major advantage. With this in mind, the Exchange is a network with huge data assets to share in a diverse community. Rapid information sharing among Exchange members is paramount in the battle against online fraud, as it’s an effective way to help identify fraudulent behaviors. Each company watches out for the others by providing information or experiences with a particular device or email flagged as suspect.
As more lenders join the Fraud Prevention Exchange, they’re finding the breadth of the transactional data shared helps them gain more confidence in their lending decisions, and therefore enables them to better serve their customers.
Collective data shared via collaborative solutions allow lenders to strengthen both existing risk systems and client relations while enabling them to:
- Reduce fraud losses without impacting lending timelines
- Receive real-time alerts to mitigate problematic activity quickly
- Quickly adjust and adapt to evolving fraud threats and trends
As online fraud evolves, rapidly sharing information and insights through robust transactional data allows lenders to focus on better serving their good customers.
To learn more about TransUnion’s Fraud Prevention Exchange, please visit https://transunioninsights.com/fraud-exchange/ or complete the form below to discuss in further detail.
*TransUnion measured serious personal loan delinquency rates for loans that were 12 months on book at both the conclusions of 2015 and 2016.