Synthetic identity theft, where scam artists cobble together an identity by blending real and fake information to obtain vehicles, has slowed somewhat during the coronavirus pandemic, credit bureau TransUnion says.
Forbearance programs may be the main reason for the decline in synthetic identities being used in auto loan applications. The programs assist consumers impacted by COVID-19 but also allow opportunities for scammers to establish an auto account and immediately request payment relief from their lender. The bureau suspects synthetic identity theft likely will rise with a vengeance once the U.S. exits a state of emergency and these relief periods expire.
Pre-COVID-19, synthetic identity fraud made up the bulk of auto fraud, Doug Clare, vice president, fraud, compliance and security solutions at Fair Isaac Corp., told Automotive News. "It's still hard to tell where you have credit-loss problems and where you have real fraud," he said. "When payments have been deferred ... it's going to be hard to determine your fraud problem."