Remote ID is quickly becoming part of the new normal and identification verification startup Onfido has been the benefactor; the...
SoFi said it missed their internal 4th quarter earnings projections due to lower than expected loan performance, increased hiring costs and expenses related to management changes according to the WSJ; the company also said they expect the loan performance trend to continue into 2018 as the look to refine their credit model; the company is also looking to improve fraud prevention, automate loan processing and get better at collections. Source.
American Banker discusses the evolution of online lending fraud and the industry's vulnerabilities; the combination of synthetic identities and multiple loan inquiries known as loan stacking have increasingly become a threat in the industry; while a number of new systems have been implemented to mitigate fraud the nature of the business makes it more susceptible with fraud prevention solutions becoming more prevalent. Source
The service from Whitepages Pro can add another layer to identity verification for online lenders; it provides lenders with analysis of a potential borrower's associated phone number, email, mailing address and business name; Whitepages CEO Rob Eleveld says the service gives lenders a broad profile of the borrower which in most cases is difficult to fraudulently create; it can also be accessed through APIs which makes connecting to the service easy for lenders. Source
Loan stacking has reportedly been influencing an increase in default rates for marketplace lenders; TransUnion has reported data on delinquency rates and online fraud; firm announced an expansion of its Fraud Prevention Exchange at LendIt USA to help mitigate online lending fraud and specifically loan stacking. Source
The UK’s Financial Conduct Authority has issued new guidance to payment providers and e-money companies on safeguarding customers’ funds; the...
Synthetic fraud is when fraudsters use a collection of information to create a fake identity for fraudulent loan applications; data verification regulations are also making synthetic fraud more challenging to detect; Auriemma Consulting Group provides three strategic suggestions for online lenders: 1) strengthen front end detection and prevention 2) use data analytics to learn from synthetic accounts and 3) enrich reporting and information sharing. Source
Ron Suber discussed the challenges that online fraud can present to marketplace lenders in his keynote speech at the Fintech Fraud Summit last week in San Francisco; to mitigate fraud, companies must have a comprehensive risk and compliance system that protects it from attacks and fraudulent loans; Ron Suber outlined Prosper's risk and compliance approach in his presentation providing an example for marketplace lenders seeking solutions for mitigating and managing fraud. Source
Fintech solutions are rapidly evolving and their growth appears to be creating increased market opportunities for innovative fraud; the frictionless payments market specifically has reported a spike in digital financial crime as money launderers find new and innovative ways to steal identities and develop synthetic profiles; the Financial Times also reports on the use of e-commerce for new types of fraudulent activity, noting that criminals can use fraudulent transaction platforms to setup inexpensive e-commerce sites that elicit funds from internet shoppers; with innovative fraud solutions growing fast, the costs of monitoring and mitigating fraudulent activity are becoming an even greater factor for fintech companies. Source
A husband and wife from Sri Lanka were arrested in Canada for fraud and money laundering; the couple reportedly used fraudulent checks and synthetic identities for fraudulent charges and purchases; both are charged with fraud of CAD5,000 ($3,729) and possession of proceeds obtained of over CAD5,000 ($3,729); the fraudulent charges are an example of the emergence of sophisticated synthetic identities that are more difficult to be detected by fraud prevention systems. Source