MIAMI — Auto lenders and banks are still grappling with the effects of the Equifax breach and how best to move forward, Rohit Bharill, vice president at Morningstar Credit Ratings, told Auto Finance News during a meeting at ABS East 2017.
Fraud was already a growing problem in the auto finance space but the Equifax breach will “either make it worse or lenders will see it as a warning sign and put checks and balances in place,” he said.
The problem is more pervasive in credit cards because online transactions aren’t as ubiquitous for auto loans, Bharill added.
“In autos it’s probably not as badly hit by Equifax, but the reality is that people’s personal data has been stolen,” he said, “so how it gets played into the auto sector is different. Overall, we are concerned about how data is moving online and impacting lending as a whole.”
Lenders are going to have to rely more on alternative forms of credit and identity analysis, Frank McKenna, chief fraud strategist at PointPredictive, told AFN. Social security numbers were once great identifiers but now nearly half the population’s numbers have been compromised.
“What we’re seeing in the industry is a greater reliance on alternative ways to verify identity,” he said. “There are companies out there developing digital identities that are trying to get away from social security numbers as an identifier and go to digital identifiers for how you transact online and they match that profile up to what fraudsters do.”
Luckily, fraudsters don’t behave like real customers do and they don’t provide the same thorough information, so new technologies should make it easier to spot this activity, McKenna said.
“All the banks are rushing to figure it out,” McKenna said. “There has been this huge announcement, but what does it mean to their customer, what does it mean to their strategy moving forward?”
For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.