Lenders today are experiencing significant losses attributed to fraudulent customer behavior at account opening, and the problem is growing rapidly.
Originations fraud has resulted in hundreds of millions of dollars lost each year due to fraudulent activity that can go undetected. Loan stacking has also materialized as an emerging issue across the industry. Our data show that, on average, 4.5% of borrowers take out more than one personal loan on the same day.
While only some forms of loan stacking are fraudulent, the practice can be costly when inauthentic borrowers apply for multiple loans from multiple lenders within a short timeframe.
To help mitigate this risk prior to transaction, we’ve launched the Fraud Prevention Exchange, a powerful industry collaborative that leverages the power of collective data to help lenders face the challenges brought on by originations fraud, including synthetic identity and loan stacking.
The Exchange is an innovative entity — a private collaboration between a group of established and emerging lenders sharing data for common interests in reducing losses — built on the power of our existing identity solutions. Our real-time alerts detect fraudulent behavior at multiple points – when a transaction is first started, when the identity-verification process is completed, and before funds are released.
How Collaboration Can Lead the Fight Against Originations Fraud
Rapid information sharing among Fraud Prevention Exchange members is paramount in the battle against online fraud.
Exchange members opt in to share transaction data during the verification process for new and existing customers, and the outcomes of those verifications. This new collaboration can help lenders further mitigate risk before completing a transaction.
Applications are evaluated as they are initiated and completed – when it’s clear a consumer has true intent to accept an offer made. They’re reviewed one final time before cash disbursement is made. Contributing members are notified within seconds if their transaction data is suspect.
As a result, both lenders and consumers will have greater certainty about fraud protection.
“As a collaborative solution, the Fraud Prevention Exchange provides a unique multi-faceted approach that can potentially help us both avoid and identify fraudsters, positively impacting both the company and our customers." John Sun, Chief Credit Officer of Avant.
The TransUnion Fraud Prevention Exchange enables lenders to:
- Reduce fraud losses without impacting the consumer experience and lending timelines
- Receive real-time alerts (within seconds) to mitigate instances where lenders don’t discover problematic accounts until days or weeks have passed and losses may have been incubating unknowingly inside live loans
- Quickly adjust and adapt to evolving fraud threats and trends
- Protect against unknowingly funding a loan to a consumer who already exceeds recommended guidelines for the number and frequency of loans allowed
With the Fraud Prevention Exchange, lenders can further mitigate risk before completing a transaction.