CROs Are Sounding the Alarm on Auto Finance Fraud — Are Dealers Listening?

The top minds in risk management across the auto finance industry are deeply concerned — and not without reason.

According to a recent Auto Finance News article, six chief risk officers (CROs) from major banks and credit unions revealed that identity-related fraud — particularly synthetic identity fraud — has become a top threat. What’s worse, many agree that advancements in AI technology are giving fraudsters the upper hand.

But while lenders are investing heavily in fraud detection, dealerships remain one of the weakest links in the auto finance fraud chain.

Who’s Sounding the Alarm?

Among the voices quoted in the article are:

• Richard Hills, K2 Integrity: warned about deepfakes and AI-generated identities.

• Joel Castenada, Vantage Bank: stressed fraud's impact on underserved communities.

• Alex Hall, Sift: highlighted how sophisticated fraud networks are bypassing traditional ID checks.

Their message is unified: fraudsters are exploiting gaps in the identity verification process — especially during credit prequalification.

How the Fraudster Operates

Synthetic fraudsters typically create “Frankenstein” profiles using real and fake data, often passing early credit checks. They then apply for auto financing — usually through prequalification forms with little to no identity safeguards.

Once approved, they move fast — often securing vehicles that are later resold, stripped for parts, or exported, leaving banks and credit unions to eat the loss.

What Red Flags Were Missed?

In many cases, the fraud could’ve been caught at the dealership level:

• No identity verification at the prequalification stage

• No fraud alert systems tied to known synthetic data patterns

• Reliance on name/DOB/SSN match only, without validating if they truly belong to the applicant

Who Paid the Price?

Financial institutions are shouldering millions in losses. But consumers — especially those in underserved markets — are also feeling the pain as fraud pushes risk models higher, tightening credit availability.

And dealerships? They’re often unaware that fraud even occurred until it’s too late.

What Could Have Stopped It?

Fraud experts agree: early detection is key.

Had identity verification been tied directly to the credit prequalification process, many of these bad actors would have been stopped before they could even generate a lead.

That’s exactly what tools like VeriQual™ are built to do — verify identity and return a credit-qualified lead in one step. No more guessing, no more relying on unsecured lead forms.

The Bottom Line for Dealers:

CROs are preparing for battle. Are you?

Dealers can no longer afford to wait for lenders to catch fraud after the fact. Frontline protection needs to start in your CRM — before a customer ever steps foot in the showroom.

Look for the VeriQual badge when getting prequalified for financing — and rest easier knowing you’re not the one keeping CROs up at night.