Fraud and identity theft impact lenders and businesses in a big way. TransUnion (TU) data show that 4.5% of borrowers take out multiple loans in a single day and that stacked loans are four times more likely to stem from fraudulent attempts. Synthetic fraud has risen every year since 2011 and 27% in the personal loan space. At the end of 2015, TU acquired Trustev, a suite of solutions that fights this fraud in a variety of ways. Pat Phelan, senior vice president of TransUnion, founded the company.
“We worked on a project with a charitable operator and needed someone for credit checking,” said Phelan, “So we started working with TransUnion. Integration went exceptionally well because I have done it before and have seen it go wrong at origination. What has worked really well is the amazing connection between us because TransUnion has all the offline data. We have the online data, and we’ve married the two. I think the first major output from that integration was our Fraud Prevention Exchange for lending. The second output was the creation of our new IDVision suite of solutions.”
What tends to happen in fraud, particularly FinTech fraud, is the multiple products lenders use for fraud detection all give different information. This means an intentionally fraudulent borrower can find gaps to slip through. According to Phelan, “You have a device ID output saying ‘This is a good device’, you have an IP address saying ‘This is from Finland’, you have an email indicator saying ‘This email was created three years ago’, and you have all these different devices, but not one single platform that can be easily integrated with fraud alerts, synthetic, identity, name-address verification, and real-time fraud alerts.”
We’ve taken all that fantastic TransUnion data,” said Phelan, “and all our digital data, which revolves around things like device ID, email verification, mobile verification, behavioral sciences, and how customers behave on-site. We have put the two of them together.” This union resulted in The Fraud Prevention Exchange last year. The product has proven popular with ecommerce customers worried about loan stacking occurring in real time ahead of credit decisions.
The rise in synthetic fraud has triggered a search for solutions and the development of additional projects looking at stacking in audio and stacking in guard. There are a lot of processes where fraud can occur; different emails, age, device IP location, device quality, and behavioral factors must be monitored. Asked if they subcontract these processes, Phelan said that everything is in-house. “It is the only way it could work because what happens is, by the time you are finished paying multiple providers for one service, the cost becomes prohibitive,” he said.
Their investment is paying off in the development of a unique product that covers many different aspects of solving the fraud problem.
Written by Nicki Jacoby.