Thousands of car buyers invented fake employers to get a car loan, study finds
Some car buyers try extreme measures to obtain financing, including fraud. Point Predictive, a machine learning-based research company, claims to have discovered more than 5,000applications linked to fake employers. We’re not talking about applicants who just make up an employer’s name and write it down on a credit application. The diagrams are quite extravagant.
According to the company’s research, released earlier this month, those thousands of applications include a spoofed employer with a fake website, fake pay stubs and other tricks to apply for credit. Lenders and dealers aren’t sniffing out these spoofed apps as well as they should, and it’s costing a lot of money, Point Predictive said: The thousands of apps represent about $1 billion in fraud, in total.
Unsurprisingly, apps linked to fake employers have incredibly high defect rates. The company estimates the delinquency rate between 40% and 100% for someone involved in one of these schemes. For lenders, it pays to catch the web of lies before releasing funds for something as expensive as buying a vehicle, especially if credit remains highly accessible to borrowers.