Fraud-Prevention Resources for Online Lenders
Several resources exist—and are receiving renewed attention—to help companies combat fraud committed during the online-lending process. With cybercrime on the rise, the non-profit Pittsburgh-headquartered National Cyber-Forensics & Training Alliance (“NCFTA”) announced earlier this year that it was opening offices in financial centers New York and Los Angeles. The NCFTA conducts real-time information sharing and analysis with experts in the public, private, and academic sectors, with its Cyber Financial Program specifically dedicated to identifying and neutralizing cyber threats to the financial-services industry from malware, phishing, social engineering, and other computer-aided or fraudulent methods. In October 2016, TransUnion launched the Fraud Prevention Exchange, an industry collaborative where reports of prior fraud and ongoing high-velocity applications are shared to help show what identities and devices may be compromised and—knowingly or unknowingly—participating in fraud. Several other industry players got involved in the Online Lending Network later that month to share data on loan applications and funded loans to assist in combatting loan stacking and excessive credit risk.
The Financial Crimes Enforcement Network (“FinCEN”) works under the parameters of Section 314(b) of the USA PATRIOT Act to assist financial institutions in sharing information with one another to identify and report activities that may involve money laundering or terrorist activity. FinCEN has “strongly encouraged” voluntary information sharing under 314(b)’s safe harbor to boost customer-due-diligence programs, bring more transparency to convoluted financial trails, and alert financial institutions to known bad actors they may not have encountered yet.
These same reasons support increased and real-time sharing of fraud-prevention data between financial institutions, particularly in the online-lending industry that is growing and speedy. As the industry matures, it seems destined for collaboration on fraud-prevention issues.