Before PointPredictive made its patented technology solution — SyntheticID Alert — available to auto-finance companies at no charge for the rest of this year, chief fraud strategist Frank McKenna returned last week for another episode of the podcast.

Senior editor Nick Zulovich asked McKenna for recommendations for how finance companies can spot potential fraud, especially in light of how much vehicle-sales and contract-underwriting activities happens online nowadays because of the coronavirus pandemic.

To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page. 

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The San Diego-based company that provides machine learning solutions to finance companies also is providing a free license to its software to help finance companies scan and identify synthetic identities within their existing portfolios, as well as scan new applications that they receive for the remainder of 2020.

“In this changing environment, auto lenders will soon be facing enormous challenges in their collections departments, as well as managing rising rates of fraud in underwriting new applications,” stated, CEO of PointPredictive chief executive officer Tim Grace in a news release. “Managing synthetic identity fraud is a key issue that impacts lenders throughout their organizations.

"While lender collection departments are not currently repossessing cars due to delinquency or default, when repossessions resume, those cars that were sold to synthetic identities will often not be found," Grace continued. “With SyntheticID Alert, we can proactively scan a lender’s entire portfolio and identify which borrowers are synthetic and which are real, so the lender understands their portfolio risk.

"And we know, from our decades of experience, that lenders will face a wave of new application fraud as the economy recovers. Not only will we scan lenders’ existing portfolios, but we will score each new application they receive so they can avoid funding any new loans to fictitious borrowers,” he went on to say.

SyntheticID Alert is powered by PointPredictive’s auto-finance consortium and patented machine learning technology techniques. SyntheticID Alert can score each application or contract in the finance company’s portfolio based on patterns of fraud that data scientists have identified across millions of historical automotive applications. The consortium aggregates more than 4 billion risk attributes which includes application, performance and fraud information from more than 30 finance compaies nationwide, spanning more than 104,000 franchised and independent dealers.

More than 70 million applications have been scanned by the consortium to date; on a monthly basis, at least 1.5 million new auto applications are added to the consortium. PointPredictive explained this process creates more than 80 million new risk attributes each month to be used within the models to assess the likelihood of fraud or misrepresentation.

The company pointed out that SyntheticID Alert was launched in 2018 and is already being used by auto-finance companies across the industry with compelling results. In head to head tests against bureau-based solutions, McKenna indicated SyntheticID Alert detected up to 30% more synthetic identities while maintaining significantly lower false positive rates.

“SyntheticID Alert addresses an important component of lenders’ overall fraud risk losses, but it’s also only a fraction of their total loss exposure,” McKenna said in the news release. “Our data analysis shows that only 10% of losses are caused by synthetic borrowers, while the other 90% occurs due to collateral, income, employment, and straw borrower fraud and misrepresentation.

“If we can help lenders take the first step in risk mitigation by addressing synthetic identity, our hope is that over time they will adopt our comprehensive auto fraud manager solution to address 100% of their fraud and misrepresentation risk losses that usually hide in early payment defaults,” he went on to say.

Interested finance companies will be able to access the SyntheticID Alert solution via PointPredictive’s cloud scoring service, which can handle both batch files as well as real-time calls through a dedicated API.

PointPredictive noted that finance companies will have the ability to securely upload their entire existing loan portfolio by providing batch files to be scored and returned for use for portfolio risk analysis, future collections and future recovery strategies.

The company added that auto-finance providers also will have the ability to submit and receive real-time or batch calls for all new applications prior to approving or funding a loan.

For auto-finance companies interested in more information or would like to use SyntheticID Alert, contact PointPredictive at info@pointpredictive.com.