The culture of instant gratification contributes to, and complicates, the growing problem of fraud. While technology allows loan approval in seconds, it also fuels the fastest-growing type of fraud: online loan application fraud.
Loan application fraud occurs when a prospective borrower provides false or misleading information on a loan application. Common examples of loan application fraud include applicants using someone else’s identity to secure a loan or misrepresenting income or assets to obtain loan approval. In the case of identity theft, once a fraudster gains access to loan proceeds, he or she disappears with the money in hand.
Synthetic fraud, which involves the creation of fake identification, is one of the most difficult types of account or loan fraud to perpetrate and detect.
“The abundance of identity data available for purchase—including fake names, social security numbers, driver’s license numbers, and even birth certificates—exacerbates the problem,” says Jim Bullard, CUNA Mutual Group senior consultant for risk and compliance solutions. “In addition, large data breaches like those involving Equifax and Yahoo increase the amount of personally identifiable information available to create synthetic identities.”
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