Loan Stacking: Protecting Consumers and Online Lenders

by ID Analytics

ID Analytics

By providing consumers and small businesses with a fast and easy way of securing funding, the marketplace lending industry has grown 700 percent from 2010 to 20141. Online lenders issued $15.91 billion in U.S. loans in 2014, according to a report published by the California Office of Business Oversight. But as the online lending market has grown, so have the number of fraudsters targeting this channel. One of the newest and more challenging types of fraud the industry faces is loan stacking.

In loan stacking schemes, fraudsters apply for multiple loans in a brief time period, targeting multiple lenders in rapid succession. Loan stacking can also seriously impact consumers when criminals use authentic identity information belonging to an unknowing consumer to quickly open dozens of loans using that person’s information.

“New-account fraud more than doubled in the past year. Fraudsters are always looking for an easier way to make more money and are targeting this relatively new financing model by going after businesses that lend online,” said Al Pascual, senior vice president, research director and head of fraud & security at Javelin Strategy & Research.

ID Analytics has been working with the industry to address these challenges head on, and recently announced the launch of a new consortium formed to enhance responsible lending, address credit and fraud risks and help protect consumers and businesses. For more information see our recent announcement: ID Analytics Announces the Online Lending Network to Help Protect Consumers and Businesses.

1. Wack, Kevin. American Banker. (8 April 2016) Marketplace Lending Grew by 700% in Four Years: Report