Identity theft is the leading cause of concern for auto lenders today, fraud experts say, after a wave of successful phishing attempts masquerading as important information about COVID-19 potentially lured thousands of consumers into giving up personal information.
As forbearance and federal stimulus programs come to an end, TransUnion warns that credit washing attempts, where consumers try to remove legitimate loans and credit products from their credit portfolios, and synthetic identity theft, where scam artists cobble together a new identity by blending real and false information they use to steal vehicles, could make a comeback.
"It's clear that fraudsters have the data and increasing opportunities to create synthetic identities and utilize stolen identities," Shai Cohen, senior vice president of Global Fraud & Identity Solutions at TransUnion, said in a statement. "It can have long-term impacts for consumers such as the compromise of multiple online accounts and bringing down credit scores, which we anticipate will increase during pandemic reconstruction."
Thirty-one percent of 2,059 U.S. adults surveyed online by TransUnion on June 30 admitted to being targeted by digital scams related to COVID-19. Some 8.5 percent admitted they fell for the scam and were victimized. The representative sample could reflect that even more people have fallen for the schemes.
Loan payments could be a challenge for consumers in coming months as lenders phase out forbearance programs even as unemployment levels remain high.
Kimberly White, director of fraud and identity at LexisNexis Risk Solutions, said synthetic and manipulated identity fraud risk rose about 50 percent mid-March through May compared with the same period in 2019.
"We have had more conversations about fraud risk than we've ever had before with auto lending," White said.