Auto Loan Fraud Surpasses Credit Card Rates in Identity Theft

Identity theft poses a severe threat in auto lending, with fraudulent auto loans increasing to 5.5% during an attack on select lenders in May of the first half of 2025. This rate is higher than the 2.7% seen for credit card applications.

The SentiLink Fraud Benchmarking Report analyzed over 236 million financial applications and highlighted common warning signs, including inconsistent phone information, mismatched email details, suspicious email domains, and risky mobile carriers as frequent red flags.

Lower Prevalence of Synthetic Fraud

Synthetic fraud, involving fabricated identities, has seen fewer cases in auto lending at 0.8% for the first half of this year. This lower risk is partly due to the difficulty of using entirely synthetic identities, which often require forged documents or manipulation by dealerships.

Auto loans are particularly susceptible to fraud because they involve substantial amounts and multiple points of interaction between buyers, dealers, and lenders,” notes Jennifer Pitt from Javelin Strategy & Research. Manual reviews by dealers often lack real-time verification, allowing fraudsters with stolen identities time to secure approval before further scrutiny.”

How the Scheme Works

A Miami-based auto theft ring used stolen identities in coordinated attacks. Mules purchased vehicles using false information on loan applications, and some dealership employees aided the process by transferring titles through corrupt DMV contacts. The ringleaders then exported or re-sold the cars.

Another method involved creating a transaction history for stolen PII using previously used applications with credit-builder companies to validate fraudulent claims during initial reviews.