As auto finance fraud rises, should lenders join forces to find a solution? The industry isn't there yet, but multiple players are working on initiatives that bring lenders together to combat fraud.
"I think people are wising up," said John Iannarelli, head of JI Consulting Group and a retired FBI agent. "It's our 21st-century community watch now. It's a great idea, but it's going to take time. The average person you talk to still doesn't understand what we're facing in the cyber world."
Although auto lenders are sharing fraud experiences more often, a full-fledged anti-fraud consortium has yet to take shape. Consortium models from other industries and countries could provide guidance, experts say.
The auto finance industry is "one of the most fragmented businesses in the United States," said Lou Loquasto, auto finance leader at Equifax. "Often, collaboration between parties, whether it be the dealer and lender or lender and lender, just isn't what it should be."
Because of the fragmentation, developing consortia may be the best way to fight fraud as an industry, he said.
The launch of a fully functional, widely accepted consortium will depend on how quickly lenders participate. But Loquasto speculates that in three years at least one established consortium will exist and that most major auto lenders will belong. Equifax has discussed fraud prevention with 35 of the top 40 auto lenders, he said.