Auto Lenders Face Emerging Threat From AI-Powered Fraud Tools
Auto lenders face an emerging threat from artificial intelligence (AI)-powered fraud tools, according to Point Predictive.
The “explosive growth” of these tools may impact lenders in 2025 and beyond, the provider of AI solutions for consumer lending said in a Tuesday (March 25) press release.
“An analysis of criminal Telegram channels revealed a 644% increase in conversations about AI and deepfakes used for fraud between 2023 and 2024, featuring sophisticated schemes such as synthetic identity generators, deepfake videos aimed at bypassing identity verification and AI-generated counterfeit identification documents,” Point Predictive said in the release.
The company said this while reporting that auto lenders suffered $9.2 billion in fraud losses in 2024. That total was the highest ever measured, according to the release.
The biggest share of auto lenders’ fraud risk exposure — 69% — was first-party fraud in which borrowers or dealerships misrepresented information to lenders, the release said. First-party fraud in the form of income and employment misrepresentation accounted for 43% of total fraud risk.
“Borrowers using their own names who inflate their income, misrepresent their employment, utilize credit washing techniques, or create new credit profiles with Credit Profile Numbers (CPNs) account for the overwhelming majority of risk fraud, yet these patterns often go undetected,” Point Predictive Chief Innovation Officer Frank McKenna said in the release.
Another fast-growing form of fraud is bust-out fraud in which criminals build credit profiles and make initial payments to appear legitimate before maxing out all their available credit lines and disappearing, according to a report the company released Tuesday. Bust-out fraud increased by 26% over the last 24 months, according to the press release.
The threat landscape has grown exponentially in the age of generative AI because fraudsters have access to AI tools for synthetic identity generation and real-time phishing attacks, PYMNTS reported Wednesday (March 19).
Financial institutions are increasingly turning to AI to enhance their fraud detection capabilities, according to the PYMNTS Intelligence and The Clearing House collaboration, “Instant Impact: AI’s Role in Advancing Real-Time Payments.”
The report found that 94% of payments professionals view AI primarily as a tool for improving fraud detection and that the adoption of AI and machine learning technologies is transforming how transactions are monitored and secured.
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