SAN DIEGO, April 11, 2017 (GLOBE NEWSWIRE) — PointPredictive Inc. today announced the availability of a new whitepaper, entitled “Improving Auto Dealer Fraud Monitoring with Pattern Recognition.” This new whitepaper highlights the critical role that auto dealers play in the growing auto lending fraud infrastructure and how to change the monitoring programs that often find the risky dealers only after major losses have occurred. The white paper outlines challenges that are common in lender practices for detecting and preventing dealer-sourced lending fraud in a timely manner and proposes an enhanced approach to addressing these challenges through consortium-based sharing of dealer risk and fraud patterns, pattern-recognition modeling, application-based monitoring, and dealer education.
“Our recent study on auto lending fraud trends revealed that, for many lenders, a very small percentage of dealers represent a very large percentage of their fraud and early payment default risk,” said Frank McKenna, Chief Fraud Strategist at PointPredictive. “This high concentration of auto lending fraud presents lenders with a very difficult challenge – detecting and preventing fraud perpetrated by a few while not burdening the rest of their dealers unnecessarily.”
Most auto lenders today cast a wide and inefficient net to address dealer fraud. They will review high-dollar fraud loss cases and review dealers with excessive defaults; they will use performance scorecards based on defaults and charge-offs; they will put problematic dealers on manual “watch lists.” These approaches are often “too little, too late” – the dealer is generally not identified as risky until six to twelve months after the funding of their first fraudulent loan. Lenders are also handicapped by a lack of visibility into a risky dealer’s behavior with other lenders due to a lack of lender-centric information sharing about dealer risk.
“PointPredictive believes that the most effective way to address dealer fraud in the auto industry is through lender participation in our Auto Fraud Consortium,” stated Tim Grace, Chief Executive Officer of PointPredictive. “By looking at each application from a dealer and by gaining a cross-industry view of dealer fraud behavior, we have created enhanced pattern recognition technology that flags high-risk dealers up to six months sooner than most lender’s existing tools.”
PointPredictive recommends that lenders adopt a proactive, educational approach with their dealers – since fraud migrates and changes over time. Lenders can help dealers understand their fraud risks earlier, before major losses occur. Dealers can also learn how to effectively flag income and employment manipulation during the application process, how to identify straw borrowers, and how to detect anomalies in finance manager results that may be leading indicators of fraud. Forming an effective fraud-prevention partnership with dealers will help lenders insure a higher level of confidence in both their loan and dealer portfolios.
To receive a copy of this whitepaper or to obtain more information about the Auto Fraud Consortium, contact [email protected].
About PointPredictive, Inc.PointPredictive, Inc. is a leading provider of fraud solutions to banks, lenders and finance companies. It solves the billion-dollar fraud problems of auto lending, mortgage lending and on-line retail fraud with the latest technology platforms, smarter science and business experience by leveraging big data with analytic models. Located in San Diego, Calif., more information about PointPredictive can be found at www.pointpredictive.com.
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