“The increase in the use of fake employers for credit applications is staggering, and the billion dollar threshold only proves the growing threat of this problem,” said Justin Hochmuth, senior fraud analyst at Point Predictive, in a press release. “We discover about 100 new fake employers that are created every week.”
Point Predictive Chief Strategist Frank McKenna said Automotive News On Friday, he expected 2022 to be a “pretty big fraud year” due to factors including vehicle scarcity and interest rates.
Dealers should be especially vigilant between February and May, McKenna said. He said fraud was on the rise in general and usually increased every year during tax season, when Point Predictive said it saw increased demand for loans and credit repair.
Thirty percent of loans from a fake employer were canceled, several times the rate of loans quoting real employers, according to Point Predictive. More than 60% of loans repaid were immediately or within the first six months.
CEO Tim Grace said some of the fake companies’ alleged work forces fail to repay their loans 40-100% of the time.
“When one of these bogus employers is used on an application, the loan is much more likely to fail,” he said in a statement.
Not all applicants with bogus employers commit “fraud for profit,” such as a criminal enterprise financing vehicles it intends to defect and sell, McKenna said.
Some fraudsters just need a car and might try to make payments on it.
“They mean well,” he said of these would-be “car fraudsters,” but they might not be able to afford the vehicle.
Another, more professional, “car fraud” scheme also exists, according to McKenna: criminals who lie to finance vehicles that they will store and sublet or lease for profit, such as on car-sharing platform Turo. .
“It’s a big new trend right now,” McKenna said, citing the rental car shortage.
McKenna said the first “car fraud” scenario has been fueled recently by an increase in the number of unscrupulous credit repair companies promoting bogus employers among other forms of repair fraud.
Unlike legitimate credit repair companies, these companies sell fake employment documents to their customers, McKenna said.
“You can start a credit repair business in a day,” McKenna said.