MADISON, Wis. (8/27/13)--Credit unions nationwide are warned of loan-fraud schemes involving fake independent car dealers located in Indiana and Florida, according to a CUNA Mutual Group Risk Alert for its bond policyholders.
Fraudsters recruit individuals to open accounts at credit unions under their real identities and apply for loans to purchase high-end vehicles from the fake car dealers. The individuals are paid for their efforts (The New Jersey Credit Union League's The Daily Exchange
CUNA Mutual said credit unions should consider these risk mitigation steps when processing loan applications submitted by new members for the purchase of vehicles, especially high-end vehicles, from unknown independent car dealers:
Scrutinize loan applications, whether submitted online or in person, by new members for the purchase of high-end vehicles from unknown independent car dealers.
Compare employment information listed in the loan application and employment/income verification documents (such as paystubs) to the current employer listed in the credit reports. If there is a discrepancy, contact the employer using a reliable telephone number to verify employment.
In reviewing the credit reports, be alert for a large number of recent inquiries by other financial institutions.
Verify vehicle identification numbers (VINs) listed on the purchase orders by using websites such as carfax.com. Use the LexisNexis Motor Vehicle Registration service to verify vehicle registration records. The department of motor vehicles in some states may offer online VIN verification. Be alert for vehicles that changed ownership.
To view the alert, use the link.