PointPredictive, a leading provider of machine learning and fraud solutions, is seeking more auto finance companies to join the newly-launched Automotive Lending Fraud Consortium.
The consortium is an industry collective aimed at tackling the problem of auto fraud which is estimated to cost some $6 billion in losses annually.
Lenders that join the consortium agree to share the patterns of fraud in their data and meet on a quarterly basis to share fraud experiences.
The initiative follows the successful launch of a similar consortium in the mortgage industry, which slashed fraud by half.
A total of 13 lenders attended a recent automotive fraud roundtable discussion in Dallas, Texas, with delegates representing more than one-third of US auto-lending originations.
Tim Grace, CEO of PointPredictive (pictured above), said: “All the lenders in attendance reported that auto lending fraud is a growing concern in their organizations and that they are bolstering their defenses in response.
“We are providing a critical missing piece to those lenders’ fraud defenses. With the consortium, we’re enabling lenders to share their patterns of auto lending fraud through predictive application risk scores and dealer risk scores — just like other industries have been doing for years. It’s almost impossible for a lender to make a big dent in their fraud losses working in isolation.”
To accelerate consortium growth, the auto lenders in attendance set in motion a plan for enhanced industry collaboration. They established guidelines and a working plan to move forward aggressively to respond to fraud.
Rich Morrin, chief operating officer for Santander Consumer USA, said: “The best way to stop fraud is together as an industry.
“We know that individuals and criminal rings work to defraud banks and financial institutions; it’s time we work together to stop them.”
To support the fraud consortium, PointPredictive will collect lender data; build machine-learning predictive application risk scoring and dealer scoring; provide PhD scientists and fraud experts to continuously analyze contributed data for patterns of risk and emerging trends across lenders; and organize quarterly consortium meetings.
Frank McKenna, chief fraud strategist of PointPredictive, said: “Ten years ago, members of the team at PointPredictive established the Mortgage Fraud Consortium.
“That helped cut fraud in half in that industry within 24 months of adoption. It’s an enormously powerful technique because it not only reduces fraud and early payment default losses, where fraud is often mistakenly classified, but it can detect more fraud while reducing false positives – compared to currently-used tools like bureau alerts.”
The Automotive Lending Fraud Consortium is open to all US auto lenders.