Machine learning and fraud solutions provider PointPredictive recently orchestrated a gathering of six of the nation’s Top 10 and nine of the nation’s Top 20 aimed at tackling the problem of auto finance fraud through collaboration.
As a part of launching what PointPredictive is calling its Automotive Lending Fraud Consortium, officials highlighted a total of 13 different finance companies — representing more than a third of U.S. auto financing originations — participated in the discussions during their Automotive Fraud Roundtable to expand consortium participation.
The event happened last month in Dallas and was hosted by Santander Consumer USA.
PointPredictive chief executive officer Tim Grace reiterated that the firm launched the consortium in response to historically high origination volumes that are fueling an estimated $6 billion in annual fraud losses to finance companies.
Grace explained finance companies that join the consortium agree to share the patterns of fraud in their data and meet on a quarterly basis to share fraud experiences.
“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,” Grace said. “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,” he continued. “It’s almost impossible for a lender to make a big dent in their fraud losses working in isolation.”
To kick off this next phase of consortium growth, PointPredictive indicated the finance companies 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.
“The best way to stop fraud is together as an industry,” said Rich Morrin, chief operating officer for Santander Consumer USA. “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 noted that it will play a critical and active role through ways such as:
• Collect finance company data
• Build machine-learning predictive application risk scoring and dealer scoring
• Provide Ph.D. scientists and fraud experts to continuously analyze contributed data for patterns of risk and emerging trends across lenders
• Organize quarterly consortium meetings
“Ten years ago, members of the team at PointPredictive established the Mortgage Fraud Consortium,” says Frank McKenna, chief fraud strategist of PointPredictive. “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,” McKenna continued.
PointPredictive added that the Automotive Lending Fraud Consortium is open to all U.S. auto finance companies.
“We are hopeful that many other lenders will reach out and join the consortium, and that attendance at the next meeting doubles or triples,” Grace said.
For more information about the Automotive Lending Fraud Consortium, contact Kathleen Waid at firstname.lastname@example.org.