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CRIF Lending Solutions Blog

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3 Loan Software Best Practices for Fraud Detection

Some people can spot a counterfeit ticket. My friend who made the trip to Atlanta for last Saturday’s SEC football championship game isn’t one of them. As we made our way to a tailgate before the game, he stopped to talk to someone selling a pair of tickets. Moments before forking over $400 for one of them, he called me over to hear what I thought.

It turns out that the ticket in question was a fake, and my buddy was saved $400 and the embarrassment of being duped. Much like any other major sporting event, ticket fraud was clearly a major concern last weekend. Fans who don’t know any better are preyed upon all of the time, so it’s as important as ever to be extra careful.

Unfortunately, fraud is not isolated to game tickets these days. Credit fraud, especially around the holidays, is just as prevalent. That's why financial institutions must be just as careful when evaluating their loan origination systems for fraud detection functionality. To help, here are three key things to consider when evaluating a platform’s fraud detection capabilities:

  • Supported methods for inserting records to the internal fraud repository: Find out from the loan origination system provider how records can be inserted into the internal fraud repository. Often times, clients want to load charged-off accounts into the fraud repository. To ensure accuracy, this should be an automated process extracting accounts from the core system and importing them to the fraud repository. Check to see if the loan origination system includes a user interface to maintain the fraud repository so records can be viewed or added manually.

  • Creation of business rules to flag questionable applications: Retrieving fraud products from internal or external data sources is just one part of the fraud detection equation. The other is the ability to configure business rules based on this data to flag applications as suspected fraudulent applications. As time goes by, you’ll want to be able to adjust these rules based on your observations and tolerances.

  • Analysis for suspected fraudulent applications: Automating application fraud detection, and possibly its resolution, is important to minimizing the turnaround time for the loan/credit decision. The loan origination system should offer capabilities to analyze the data associated with suspected fraudulent applications. By doing so, patterns can be observed and steps in the workflow can be configured to automate the resolution for certain conditions.

Besides the three factors mentioned above, your loan software should also provide the ability to configure different fraud detection strategies based on channel. This means that your system should have the flexibility for separate strategies for applications submitted in the branch and ones submitted online or from mobile devices. 

Much like my friend on the verge on flushing $400 to watch the game on TV before I helped him identify it as a scam, financial institutions need loan software that protects them from fraud. CRIF ACTion’s suite of business and consumer loan origination systems are armed with the industry’s most advanced fraud detection functionality. Click here to schedule a consultation if you’d like to learn more.

Fraud eBook cover.jpgBeyond technology, how your scorecard is structured can also open the door to more fraudulent activity. That’s why CRIF Achieve’s analytics and business consulting team is also available to help institutions fine tune their scorecards. Want to learn more about how this works? For more information on scorecard best practices for fraud detection and prevention, please click the button below to request a copy of our complimentary eBook.

Request Our Fraud eBook

Photo Credit: Alyson Hurt

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