TransUnion (NYSE:TRU) announced the launch of its Fraud Prevention Exchange, a powerful industry collaborative designed to enhance responsible lending by helping combat online fraud. The Fraud Prevention Exchange, which includes established and emerging FinTech lenders, was unveiled at the Lend360 conference.
The Fraud Prevention Exchange will leverage the power of collective data and help lenders face challenges brought on by originations fraud, including synthetic identity and loan stacking. Rapid information sharing among Exchange members is paramount in the battle against online fraud.
The Exchange is timely because originations fraud has resulted in hundreds of millions of dollars lost each year due to fraudulent activity that can go undetected by some lenders. Loan stacking also has materialized as an emerging issue across the industry. TransUnion data show that, on average, 4.5% of borrowers take out more than one personal loan on the same day. While only some forms of loan stacking are fraudulent, the practice can be costly when inauthentic borrowers apply for multiple loans from multiple lenders within a short timeframe.
“Lenders today are spending precious resources and experiencing significant losses attributable to fraudulent customer behavior. The TransUnion Fraud Prevention Exchange is an innovative approach to build on the power of our existing identity solutions with the establishment of a private collaboration between a group of lenders sharing data for common interests in reducing losses,” said Pat Phelan, senior vice president in TransUnion’s innovative solutions group.
Fraud Prevention Exchange members opt in to share transaction data during the verification process for new and existing customers, and the outcomes of those verifications. TransUnion analyzes this member input, watching for potentially fraudulent transaction activity and reported fraud across the network. Applications are evaluated as they are initiated and as they are completed – when it is clear a consumer has true intent to accept an offer made. They are reviewed one final time before cash disbursement is made. Contributing members are notified within seconds if their transaction data is suspect.
“As a collaborative solution, the Fraud Prevention Exchange provides a unique multi-faceted approach that can potentially help us both avoid and identify fraudsters, positively impacting both the company and our customers,” said John Sun, Chief Credit Officer of Avant, an online lending platform.
Fraud Prevention Exchange Benefits
With TransUnion’s Fraud Prevention Exchange, lenders can utilize collective data to strengthen existing risk systems. The Exchange enables lenders to:
- Reduce fraud losses without impacting the consumer experience and lending timelines.
- Receive real-time alerts (within seconds) to mitigate instances where lenders don’t discover problematic accounts until days or weeks have passed and losses may have been incubatinunknowingly inside live loans.
- Quickly adjust and adapt to evolving fraud threats and trends.
- Have protection from unknowingly funding a loan to a consumer who already exceeds recommended guidelines for the number and frequency of loans allowed.
“With the Fraud Prevention Exchange, lenders can further mitigate risk before completing a transaction,” Phelan said. “Our real time alerts detect fraudulent behavior at multiple points – when a transaction is first started, when the identity-verification process is completed and even before funds are released. As a result, both lenders and consumers will have greater certainty about fraud protection.”
Source: TransUnion Press Release