Protect Your Business Against Credit Report Fraud

Credit report fraud is on the rise, and so is the dollar amount taken from the average American each passing year. In 2020, a total of 34% of all fraud reports to the FTC claimed money was stolen, scammed, or hijacked from their accounts after conducting internet transactions in the form of prizes, sweepstakes, lotteries, or telephone and mobile services according to an FTC report in February of 2021. 

Imposter scams remain the most rampant form of fraudulent activity reported to the FTC, affecting more than 2.1 million individuals in the US alone. These can come in the form of synthetic identity fraud, driver’s license identity theft, social security number theft, bank account takeovers, and more. 406,375 individuals claimed their identities were fraudulently used for government services or benefits, including unemployment, compared to only 23,213 reports the year before in 2019. The increase is staggering, which calls for a solution for businesses and individuals to combat the growing threat of credit fraud.

What steps can prevent fraud?

Many resources are made available by businesses and internet services to prevent the likelihood of the aforementioned fraudulent activities. Soft Pull Solutions, for example, delivers on their mission to deter scams and false identities with their integrated API (application programming interface) capable of detecting red flags and compliance issues between clients and businesses. 

ID verification and fraud

Built-in to their API comes driver’s license verification. Car dealers and financial institutions loaning high dollar amounts to customers can benefit from the 24 instantaneous e-verification detection checks to determine the eligibility and accuracy of the client in question. If any discrepancies arise, alerts can notify users of potential fraudulent activity or misused identities before proceeding with lending or approvals.

Red Flag compliance and fraud

Depending on the discrepancy, Soft Pull Solution’s compliance suite can detect minor or major signs of fraud. Anything from address mismatches, social security checks, and cross referencing identity information are conducted in real-time, providing users instantaneous results whether identities are fabricated, altered, or legitimate. Before sending contracts or approval requests, users with the latest API features can mitigate:

• A damaged reputation
• Fines for noncompliance with “Know Your Customer”
• Account opening and maintenance costs
• Monetary loss from the unpaid balance
• Rising collections costs for tracking down false identities
• Thinner margins
• Less advantageous rates for customers

Automated income check (AIC)

When lenders access client information with comprehensive APIs, automated income checks can determine who to lend to based on more than just credit scores. In addition to verifying the legitimacy of the client, users can evaluate the annual income, work history, employment information, and tenure all at the click of a button. Without waiting for third parties to evaluate client backgrounds, users are given access to all pertinent information made available in real-time. The likeliness of making under-informed lending decisions is decreased significantly when given pertinent information made available by the proper APIs.

Alternative credit data

One of the top three credit bureaus, Experian, has provided lenders and financing companies access to additional data not commonly found on most credit reports. This increase in information decreases risk while identifying customers who may be less likely to repay loans. On standard credit scores and reports, lenders can view FICO and vantage credit scores for most lending decisions. With alternative credit data offered through Clarity, lenders gain additional access to:

• Consumer stability data
• Employment and income data
• Property ownership
• Bankruptcies, liens, judgements
• Driver’s license data
• Banking relationships
• Account types
• A consumer’s contact details
• Timeliness of payment
• Rental lengths
• Payment history

Financial stability is a paramount factor when making appropriate lending decisions. Without accurate information, lenders are exponentially more likely to suffer from fraudulent identities or falsified information. With alternative credit data, your lending decisions are made with the utmost knowledge and dependability in the rising age of fraud.

What to do if you’ve become a victim of fraud

Fraud alert

If you’ve noticed you’ve become a victim of fraud, you’ve likely received a fraud alert to inform you of red flags related to your account. If you haven’t yet received a fraud alert, but suspect you may be a victim of fraudulent activity, contact any of the three credit bureaus—Experian, Equifax, TransUnion—to inform them of the fraudulent behavior on your account. 

As an effect, any activity in your name is temporarily flagged as warranting further investigation and verification before proceeding with loans or approvals. These can last one year, are free to request, and can be done by anyone who believes their account may be compromised. In addition to the alert, you’ll receive a free copy of your credit report from all three of the bureaus to ensure your history is accurate and unscathed.

Extended fraud alert

For the more serious and identifiable instances of identity theft, individuals can file a report with the FTC or law enforcement for ongoing protections. Only after a report has been filed through IdentityTheft.gov can an extended fraud alert be requested. 

This free alert lasts seven years, and allows access to two of your credit reports in one year. Credit bureaus take additional steps to verify your identity for any future credit transactions, contacting you directly before any new lines of credit are opened under your name. In addition, you’ll be removed from unsolicited credit sales from businesses offering “prescreened” offers.

What have you got to lose?

As a business making lending decisions, lending to the wrong client can incur hours of headache, thousands in losses, and damage to credibility as a reputable lending institution. 

The facts remain; the growing numbers of fraudulent activity are posing more threats to businesses and lenders each year. Utilizing the latest software and verification systems can drastically reduce the likelihood of becoming a victim to these common crimes. 

Your lending decisions matter, and so do the means of making reliable lending choices. Contacting organizations like Soft Pull Solutions who specialize in fraud detection and accurate credit reporting information can provide the peace of mind for the most dependable decisions. Reach out to one of their specialists to discuss how their API portal can begin filtering fraud from your future.