The Auto Finance Coalition has been meeting with the Federal Trade Commission to discuss changes to the Fair Credit Reporting Act, said Todd Wolf, chairman of the Auto Finance Coalition in the first session of the Auto Finance Risk Summit webinar series. He said the AFC hopes to secure an extended window to investigate claims of identity fraud.
“We’ve had a lot of meetings within the last 12 months about the issues and [the FTC has] had open dialogues with us,” Wolf said. “They are now recognizing that there’s a gap that they might have to fill.”
Synthetic identity theft in auto finance is a paramount threat to consumers and an increasingly popular method for bad actors to defraud lenders, who are already under tight deadlines to complete investigations into fraudulent transactions, Wolf said.
A consumer filing an identity theft report under the Fair Credit Reporting Act may submit the paperwork directly to the lender to streamline the process, or directly with the FTC or a credit rating agency. From there, the FTC or rating agency would distribute the report to the lender, who is ultimately responsible for conducting the investigation.
The catch is in the deadline: The entire investigation has to be concluded within 30 days from when the FTC or credit rating agency first receives the forms, which Wolf says leaves “no time for [lenders] to catch up.” If it is not completed within the 30 days, the tradeline — a record of accounts on an individual’s credit statement — is removed from the consumer’s credit report and future underwriters never see it.
This is an issue for lenders as synthetic identity fraud, a $1.4 billion problem, shows no sign of slowing, Wolf said. In order to extend the 30-day time crunch, the AFC, a consortium of more than 200 of the nation’s top auto finance lenders, is collaborating with the FTC.
“I’ve been on a couple of calls with the FTC and they are actually listening and understanding,” Wolf told AFN. “I am pretty sure they are willing to work with the financial community.”
Another issue the AFC would like the FTC to address is how credit repair agencies probe consumers to explore loopholes in the Fair Credit Reporting Act and attempt to “educate the public on the gray area that could be criminality,” Wolf said.
Wolf concluded the session by urging the finance community to communicate problems and their potential solutions with other lenders, law enforcement and the AFC as a way to reduce fraudulent transactions.
“The important thing going back to all of this is cooperation, communication and collaboration, in order to combat any type of fraud in the auto finance world or in any part of the world,” Wolf said. “We have to share, we have to deliver the message because — without sharing — we aren’t going to get anywhere.”
Originally published on Auto Finance News