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ConsumerFi Podcast: Spotting and Avoiding Identity Fraud with Socure’s Steve Craig

July 1, 2022

Episode 33


Joel is joined by Socure’s Director of Sales, Steve Craig, to talk about why identity verification is often your most important step in fraud prevention, the difference between identity and credit risk, and how fraud has evolved from ‘mom and pop operations’ to sophisticated criminal organizations.

You can meet Joel in person at the National Automotive Finance Association’s 25th Annual Non-Prime Auto Financing Conference this August 30 – September 1, 2021 in Plano, Texas. Register today!

ConsumerFi is presented by Nortridge Software: Loan Software That Accelerates Change.

And special thanks to The National Automotive Finance Association: The only trade association exclusively serving the nonprime auto finance industry.


[0 4:29:22 AM] Joel Kennedy: You’re listening to the ConsumerFi podcast powered by Nortridge loan software that accelerates dream

[00:00:20] everybody. Welcome to another episode of the ConsumerFi podcast. I’m pleased to be joined today by Steve Craig of Socure, Steve. Welcome to the pod.

[00:00:28] Steve Craig: [00:00:28] Hey, thank you, Joe. It’s great to be here.

[00:00:31] Joel Kennedy: [00:00:31] So Steve and I met a couple years ago when we were in the first year of kicking off, off fraud, Friday for the national automotive finance association.

[00:00:40] And Steve is somebody who is an expert and a leader in the field who was gracious enough to come and join us and really help crack open the topic and talk about a number of fraud schemes, and other things that as lenders. And this is, this was specific to non-prime auto. Which is an interesting place where a lot of fraud can be [00:01:00] perpetrated, to be honest.

[00:01:00] And so Steve, we met back then and you kind of enlightened us. Do you want to tell us a little bit of your background and then we definitely want to dive into soak cure and what you’re up to today?

[00:01:10] Steve Craig: [00:01:10] Yeah, I’d love to thanks for having me on the podcast. Joel, this is, this is amazing. What you’ve built here.

[00:01:15] I’ve been listening to the show for some time, so it’s great. To be a guest on it. It’s my name is Steve Craig and I’m with so cure, but I’ve been with secure just a few months, but I’ve been in the identity verification industry for about six years. I’ve been in the financial services tech space for a long time.

[00:01:33] I was actually a loan off. Many years ago. I don’t know if I told you that. Joel, I used to process loans for banks and credit unions across the country. I didn’t know that

[00:01:42] Joel Kennedy: [00:01:42] you figured out how fraud

[00:01:43] works

[00:01:44] Steve Craig: [00:01:44] well call center while I was in college and we processed loans for smaller credit unions and banks.

[00:01:50] And I was the person that answered the phone. Hey, this is Steve. What type of loan would you like to apply for insight? I help people through their consumer lending process, but yeah, that was my [00:02:00] first exposure to fraud because we were in a call center. We weren’t allowed to. To question the person on the other side of the phone, if they had the information, if they had the social, if they had, you know, all the details we needed, we took the app.

[00:02:13] Uh, we didn’t, we didn’t challenge them. Uh, things didn’t sound right. Uh, so that was my first foray, but, uh, I I’ve been in the industry for, for a while, mostly worked in internet companies. And when I joined the identity verification, I was blown away by how much fraud activity was occurring. First, it was with w with credit card applications, really, and card not present.

[00:02:33] And then as more and more moved online, once we saw EMV come in, when that became more of a standard, um, you started to see fraud that had been out in the physical world, move online, fraudsters got to eat too. And so that, that concept of really making sure you’re dealing with the consumer on the other side of the mobile phone or on the website.

[00:02:52] Became really important. So I’ve been working with clients for years on that building solutions, roadmap development, uh, making sure [00:03:00] that we’ve got the right tech in place. And now I’m at so cure, which is just a rocket ship of a company right now that solves these problems in great detail. So I’m really excited to be with them.

[00:03:10] Joel Kennedy: [00:03:10] When we think back to the, to the origin and the Genesis of fraud, you talked about some of the card, not present, obviously some of the income and employment, things that are stated items, right. And then it’s really on the lender to do all the homework to try to figure out does this actually match. With an individual that may be receiving legitimate earnings, but it’s, you know, maybe they’re a landscaper.

[00:03:32] And so they get paid really in cash or, you know, other customer direct kind of payments. And it’s very hard for us to audit because these people may not be heavily banked. But, so, so when I think back to the, to the kind of origins and the Genesis within auto, and you mentioned mortgage, which I think is probably very similar, what were the, what were the big, you mentioned card, not present, but what were some of the other big things that we were seeing in fraud?

[00:03:54] No say 10 years ago.

[00:03:57] Steve Craig: [00:03:57] Yeah. Well, if you look back in time, like 10 years [00:04:00] ago, well, the standard for proving identity in many of these digital channels was this process of knowledge based authentication. These are the questions that we all know and love about our financial history. What was your mortgage payment five years ago?

[00:04:12] Or what street did you live on or what was this payment or that. And I think for a while that that worked because those details were, were sensitive. I mean, they weren’t, they weren’t secret, but they, they were private to the individual, but we started to see more and more breaches credit credit data breaches to the point where this information was, was out there and available for fraudsters to.

[00:04:34] Say, Hey, I’m going to pretend to be Joel. I have all of his information. I’m going to go ahead and just answer these questions and get through the process. So this process of impersonation was, was rampant and many companies popped up to solve that problem. I think the biggest was LifeLock. I recall the founder and CEO.

[00:04:51] Put his social security number and ads. And she stopped doing that after a while, but, um, very, very bold in the claims, like, look it impersonation can be worded. Um, [00:05:00] so we started to see a shifts of away from KBA as more data became available for, for the fraudsters to perpetrate that. And then as more.

[00:05:10] Cavity, uh, increased as the iPhones and the different smartphones proliferated. We saw more on mobile activity rather than, um, in branch applications. So it was, it was just more opportunity to commit to impersonation, but that started to shift. I’m a personation and you know, there’s, there’s certainly, um, certainly a lot of that out there.

[00:05:26] That’s the third party fraud, but we’re starting to see a more unique fraud types. Okay. Yeah. I

[00:05:30] Joel Kennedy: [00:05:30] remember that was a hot topic back in the day, about how the cell phone, right? Your cell phone hit a point of importance where now I think you have to scratch your head. If somebody said, would you rather use lose your wallet or your cell phone, which would you rather lose, especially if you were like on travel somewhere.

[00:05:45] Right? I don’t know. I tend to take photos of important documents. If I’m on travel just as a backup and having it on your phone is really helpful, but you kind of walked away. So the story Steven, and I want to tie this in with what soak yours too, you know, nowadays, but, um, what are [00:06:00] some of the elements of fraud that you’re seeing now in particular?

[00:06:02] I mean, you think about what happened with COVID with a large preponderance of companies having to figure. How to work in a distributed fashion. Obviously you’re not having customers come into the branches so that you can look them in the eye. At least my understanding of it is the fraudsters are smart.

[00:06:17] If you close one door, they’ll let go and open another one. And tell us a little bit about what you guys have been seeing along the way.

[00:06:25] Steve Craig: [00:06:25] Yeah. And I can give you a little bit more about what I’ve been seeing the last few years as yeah. Has, uh, been challenging, uh, as, uh, as an identity proofing process, the industry has looked to alternatives.

[00:06:38] And if you think about the classical, like how do you have strong customer authentication? It’s typically what, you know, what you have. And who you are. And the, what you know is okay. If you have, uh, established a relationship, you have passwords. We continue to use passwords as our primary point of future authentication.

[00:06:55] But if you don’t have that pre-established relationship, that’s where KBA came [00:07:00] in. That’s where you, you, you, uh, have knowledge-based questions. So you can prove, okay, Joel knows this information, but because that is no longer a great method, they’ve looked at other ways. So if you look at what you have and who you are, this is where the beginning of identity document based verification started.

[00:07:14] This is, Hey, you’ve got a government issued credential in your wallet. You can bring that to your mobile camera. You take a picture of it. And then if you want to match that up to who you are, You take a selfie, we do a biometric scan of that. You, you ensure that it’s alive present person and you do that comparison, but, uh, fraudsters have gotten hip to that.

[00:07:34] And the ability to manufacture government issued documents without it being from the government. I like the specifications that you get from the DMS. You’re able to do that in this ecosystem currently, by going on various websites and putting in details. And you’re getting equipment bought in these countries that maybe turn the other eye, uh, when it comes to who has access to them.

[00:07:55] And they’re printing identity documents that look exactly like the [00:08:00] identity documents you or I would get official. And then they’re even as bold as to put their face on the document, you know, they’re, they’re in another country, they don’t care. They’re maybe doing a VPNN to get access and they pass through those additional gates that have been thrown.

[00:08:14] So that’s become more and more challenging. Now you don’t, you have the, what you have and who you are. If you can get past that, like what, what is left. And that’s what really drew me to cure is you need to take a holistic multi-dimensional view of someone’s identity. So, as an example, just because I have.

[00:08:31] And ID and I have my face and it matches the document. What are the other digital trails? What’s your digital DNA that exists out in the ecosystem to be able to link those pieces back. And so that’s, that’s really the, the direction that the industry’s going is multiple data points, not just the one, not just the identity document and the

[00:08:49] Joel Kennedy: [00:08:49] face that I think about the power of, of like a blockchain address, where it can be very unique, very difficult to break it down.

[00:08:56] Yeah. It does, it can be your kind of [00:09:00] personal fingerprint, if you will. I mean, you, are you aware of anybody doing anything with, with blockchain type technology to increase our ability to credential people or you just kind of thinking, you know, on, on Mars, I belong with Elon Musk unusable.

[00:09:15] Steve Craig: [00:09:15] No, that there’s actually like really since the beginning of, of cryptocurrencies and Bitcoin and all of these, uh, these, uh, blockchain use cases, there has been a dialogue around the use of, of a blockchain and identity because you can essentially track back those transactions.

[00:09:33] You can establish trust. You can decentralize it. There are many companies in the space that are leveraging that technology. But I mean, there’s some, some weaknesses to it in the context of identity, some are related to privacy, some are related to transactional speed. Uh, there’s certainly a cost element to it.

[00:09:52] Most of the ecosystem currently. Is rather centralized by the, let’s say the, say your bank and you’re [00:10:00] trying to verify identities. You’re still looking to, to keep that information within your ecosystem. You may not want another competing bank to have the same exact identity information that is portable.

[00:10:13] And so there’s an element of competitiveness, but at the same time, the banks have realized at least when it comes to sharing outcomes, that there’s. Uh, in the consortium, but as far as blockchain, I think what, we’ll see some emergence there, but that’s not an area that, uh, I really focused on myself in recent years.

[00:10:32] So

[00:10:32] Joel Kennedy: [00:10:32] to bring it to is a great segue. So to bring it to a point of, you know, some of the things that you’re, you’re working on, right. We, we talked before recording a little bit about credit washing. What are the types of problems specifically that soak your is, is solving and how you, how you go about doing it and how people use your, yeah,

[00:10:51] Steve Craig: [00:10:51] let me go a little bit deeper into secure, uh, for those that are listing security.

[00:10:55] Venture back company it’s been around almost 10 years. Uh, recently raised about a [00:11:00] hundred million on a, on a series series, D a $1.3 billion valuation. So well-established company and secure. So differentiation in the market is to take a holistic view of identity to not just depend on a singular signal.

[00:11:14] So when it comes to auto finance or credit card issuance, or even getting a DDA account or checking account, there’s a series of steps you need to go through. And the identity life cycle. To make sure that you’re working with the person that you think you are. And many lenders have for a long time thought about credit risk.

[00:11:33] I credit risk is central to lending risk. And that includes, you know, can this person pay the loan and do they have the character and your capacity? Um, no, the, the five CS, I forgot them all, but there’s an important elements there. Often identity is thought of as a stipulation or. Okay subject to getting this loan, you have to prove who you are.

[00:11:55] But what we’re saying is, um, identity risk and credit risk are two different things. [00:12:00] And if you address identity rests, identity risk sooner in the process, that’s going to improve your credit quality long-term. But it’s also going to save you from. Fraud losses. It’s going to save you from trying to go down a very expensive process only to find you get to the end and you can’t prove out the person, or you have to take a questionable, a leap of faith.

[00:12:20] And so what we’re doing at so cure is we’re ensuring that along the journey, all through a single platform, lenders, especially those doing auto lending can use the right level of verification when it’s supposed to appropriate. So as an example, process of KYC, know your customer. To make sure that this person exists.

[00:12:38] The status quo for that. A lot of times is soft inquiry, or maybe it’s the KBA or some other means where you’re just establishing that this person exists using the credit file. You’re actually cutting off a lot of people who are either new to credit or are just getting established, might be new to country.

[00:12:57] So when you think about, does this person exist? [00:13:00] You need to take a multidimensional view there. So is the name, address, date of birth, email, phone number. Do these things exist out in the ecosystem? And can you prove that yes, this person exists. So that’s the first layer. Once you get past that hurdle, you move on to the next check, which is, is this person really who they claim to be, because you don’t want to get into a situation where you have.

[00:13:23] Third-party fraud. This goes back to the class. What people think of as identity theft, I’ve taken your information, Joel, because I either Googled enough about you or I stole your mail or something that impersonation fraud still happens. So we have models that predict a third party fraud. Do we have a model that, that can tell you if we believe that this is an impersonation, we also have a model that will predict synthetic.

[00:13:48] And set that synthetic fraud is a really fast growing area of, of, uh, fraud losses, which is hard to catch because these synthetic profiles look like either thin file [00:14:00] applicants or a great, they

[00:14:02] Joel Kennedy: [00:14:02] have established credit profiles and they’ve been, they’ve been cultivated. Out of nothing. So it’s not like you have a victim on the other end of the transaction that you’re using this identity.

[00:14:14] It’s, they’ve created this out of nothing. So you are not going to get a complaint from somebody saying somebody is going out, opening up credit cards in my name.

[00:14:21] Steve Craig: [00:14:21] Yeah. And that, that, that’s what the current system depends on. Like the ecosystem depends on there being a victim, right there being someone who’s re raised their hand and saying, Hey, I didn’t, I didn’t set up this loan, but because the synthetic identity doesn’t matter.

[00:14:36] And the person who is activating that identity, like their intent is to create more accounts and then eventually create a credit loss. And it makes it very hard to detect. And because these synthetic identities often interact with other synthetic identities, either through money meal activities or through sharing trade lines, you start to breed them and seed them to the point where you could have [00:15:00] a vast number of these already in the ecosystem.

[00:15:02] And that’s part of what secure is solving for uniquely in the model. Having a model tuned to synthetic attacks, looking at situations where when we take a holistic view of the identity and we’re linking and we’re layering different signals, we’ve created predictors to say, Hey, this, this looks, this fits a profile.

[00:15:21] Okay. Synthetic attack that we’ve seen at another customer, which is an important part of something. I haven’t mentioned about those two models for our third party, synthetic or third-party and synthetic models are built on the feedback of some of the largest clients in the space. They share that with us, and then we build our models.

[00:15:41] So it’s this consortium effect where if one client has experienced a certain level of fraud and a different client is, is in a secure ecosystem. We’re forwarding that fraud for them. I always

[00:15:52] Joel Kennedy: [00:15:52] love taking, you know, all the, the masses of debt cause it’s mutually beneficial and it’s helpful in all the companies that participate.

[00:15:59] I [00:16:00] mean, we’re already doing it for the basis of credit anyway, right? I mean, that’s kind of, you’re not required to look there’s companies that I’m sure did not report and didn’t have the best controls in place. You might’ve applied for a loan and you didn’t perform. And then you came in again to us and since the tradeline was not reported, the underwriter just passes.

[00:16:19] You. Not knowing, not even realizing that you had already had a loan with us that you, you defaulted on. That’s why we report to the credit bureau. So we have a good data. Everybody can use it, even using it yourself. In my, in my example, the same thing goes a long way with, with fraud data and information as well.

[00:16:40] Steve Craig: [00:16:40] Yeah. And it’s key to what we’re solving for, which is identity risks, because if an identity has broken through at one financial institution, If it works, chances are that fraudster is going to apply it to. Because many of these banks and lenders that are using similar systems. So once they [00:17:00] find that a attack vector, they exploited and they exploded at scale.

[00:17:04] And the interesting thing, and not a lot of people think about this is these are not what I might call a mom and pop fraudster, you know, a person in their basement, just trying to do small rip offs and maybe buy stuff at best buy, et cetera. Like these are coordinating. Fraud rings. These are criminal networks that may be in other countries that are recruiting people from top universities to perpetrate these schemes.

[00:17:28] So it’s not a fair fight, right? Uh, the fraudsters don’t work with regulations. They don’t go, oh, well, we can’t do this because of Patriot act or we can’t do this because of the fair credit reporting act. They have no rules. The banks, the lenders. Really anyone who’s proving identity, they have to follow rules.

[00:17:44] There’s consequences to doing things like not providing adverse action reasons or potentially having scenarios of discrimination. So you have to be very thoughtful and thorough in what you do. Fraudsters don’t don’t care about any of that. So it makes it really challenging. So those are the two [00:18:00] beginning elements.

[00:18:00] And then another thing I’d add that I think is of growing importance. In lending, which is mostly been around, say DDA accounts, savings accounts is this process of watchlist screening. Being able to make sure that the person you’re establishing business is not on some terrorist lists or maybe they’re a politically exposed person, or maybe there’s been, uh, adverse media, like people’s names get brought through mass publications sometimes with great personal details.

[00:18:29] Those individuals become targets for identity impersonation. Because now they’re out there. Right? And so being able to track that I doubt most, most lenders are paying attention to the press as they’re underwriting. Oh, it’s this, this name fits, you know, some major news story that broke. And so that’s an important part of the process as well as ensuring that you’re screening for those scenarios of exposure.

[00:18:52] Joel Kennedy: [00:18:52] That’s interesting, but it’s also kind of scary cause it’s, it, it reminds me of like the social score that they have over in China. I don’t know if you’ve ever tracked that, but they have [00:19:00] that instead of, at least how I understand it. I don’t know how true it is. It might just be a bunch of fake news, but they said, you know, they have these social scores and that’s basically your, your credit report over there.

[00:19:09] But the government is really the one that’s controlling. Yeah. Algorithm.

[00:19:13] Steve Craig: [00:19:13] Y I I’ve heard about that. Uh, I’m a fan of the Netflix series. I think they, they have this dystopian views of the world. And there’s a episode about that where every interaction is scored between individuals and then your social score limits you in what you can do.

[00:19:31] And what I think that was really interesting, fascinating about that is our credit ecosystem. Is not too different than that. It’s driven more by financials, but it can be very punitive, right? If let’s say, I’ll give you, tell you a story. When I turned 18, the first thing I wanted to do is establish credit.

[00:19:50] I applied for a target card, then filed, denied. At least that created an inquiry. I existed. I think at that point I applied for a credit [00:20:00] card with another big company. 2 5200 $50 limit. I was, I was thrilled and I had a truck then I think a month or two later, I applied with a top bank. Uh, they gave me a $5,000 credit card and I’m 18.

[00:20:15] And it’s like from denied to cap NBNA

[00:20:22] Joel Kennedy: [00:20:22] back in the day and all those Delaware guys. I mean, they were, they were. I could have gotten a a hundred thousand dollars credit card at that age. I, yeah, after I established, I got a couple of credit cards. I got one from MBNA. I think it was a national wrestling association branded card.

[00:20:37] I think there was even a wrestler was on their money gang or something who knows, but it was easy. Right? Any event you go to, there was somebody there with a table and they wanted to sell you a credit. They wanted to get you to sign up for a credit card.

[00:20:49] Steve Craig: [00:20:49] At that time to all of it, there was a lot of recruiting and universities.

[00:20:53] So I remember days. So in college, Rows of tables, sign up for a credit card. Yeah. [00:21:00] But where I’m going with the story is like, so 5,000, what did I, what did I do at 18? I used it here and there suddenly it’s. Yeah. How, how, how did I spend $5,000 in a matter of six months when I, you know, I’m barely making over minimum and wage at the time.

[00:21:16] And so I was immediately drowns, right? Um, and then, uh, with minimum payments, what I decided to do and then not what a lot of people do is I made sure I kept up with minimums and I had to choose between sometimes eating food and paying a credit card payment for me, that, that paid off. I continued. I approve my credit and credit.

[00:21:38] It’s been an important part of my financial livelihood, route, getting lower interest rates just gets you the lower payments on cars and mortgages, et cetera. But there are individuals that don’t do that. And so when, when they’re young, they make credit mistakes and they don’t know, they don’t know any better.

[00:21:53] There’s not a lot of financial literacy going on in the world, especially in high school. And so they’re stuck with that. Then [00:22:00] when they’re 22, 23, like they’re dealing with mistakes. When they’re still really a kid. And so what do they do? They turn to these sometimes they’re, they’re legit, you know, help you get rid of your debt and give you debt relief.

[00:22:12] But in many cases, they’re in the various right there. We’re going to help you improve your credit. We’re going to help you. Get these bad things off your, your, your, uh, profile and people jump for it because there’s no other, no other mechanism other than maybe bankruptcy and exiting the credit ecosystem for a while.

[00:22:31] So this is where the credit washing schemes that we were talking about, um, came up. Um, this is where these companies are promising miracles, but what they’re really doing is exploiting loopholes and the financial system where they’re reporting. Good debts, uh, gone bad as, as identity. That’s right.

[00:22:49] Joel Kennedy: [00:22:49] I, I, I I’m, I’m not going to claim this as real debt, right?

[00:22:55] They may have opened it. They say this is not right.

[00:22:58] Steve Craig: [00:22:58] Yeah, and they’re [00:23:00] just, they’re just signing their name away to that. And people are charging them fees to do that. Sometimes they will try to find individuals that will we’ll sell authorized user accounts. Hey, let me, let me get on your, your, uh, home Depot card, Joel.

[00:23:12] That way it can help build my credit back up. If that’s between family members, maybe that’s okay. But when it becomes between perfect strangers, you don’t know who you’re letting piggyback onto your card. And

[00:23:23] Joel Kennedy: [00:23:23] maybe these are isn’t that the term piggybacking,

[00:23:26] Steve Craig: [00:23:26] piggybacking it, uh, sharing trade lines.

[00:23:29] There’s companies that supply trade lines that you can go. And there are like peer to peer networks where they’ll, they’ll set you up for those that, that think they’re doing something by selling their, their authorized user account or joining on a tradeline. Chances are these fraudsters are exploding that as well.

[00:23:46] So this is where these synthetic identities can get. Because they’re, they’re piggybacking on a trade line and they’re creating an identity out of nowhere and they will, they will pay it. They will be good right there. There’ll be good users. And then once that relationship’s [00:24:00] done, you’ve now created this Phantom.

[00:24:02] They can go and get the a hundred thousand dollars credit line or, yeah. An automotive vehicle through, and this gets into more automated use cases, but the digital transformation that’s happening with car buying is, is amazing for, for, you know, an industry that’s been fairly static, but that’s more exploitation opportunity because if you’re never going into a dealership to make a car purchase, and you’re doing these things all remote, like this is a fraudster stream that you don’t have to prove yourself, physically, you do it through these digital metrics.

[00:24:34] You’re right to

[00:24:35] Joel Kennedy: [00:24:35] call out the process change. Right? A lot more online touchless delivery. You mentioned people are getting recruited out of college to join. Clearly criminal situations when I’m talking to these people that are clearly in a, in an offshore call center and they know they’re not the IRS and they know they’re not U S customs and they’re just doing this anyway.

[00:24:56] I feel like there’s this degradation in [00:25:00] terms of people just don’t care, or maybe it’s because of the great distrust of governments, et cetera. I almost get a sense that people feel justified that they’re normalizing this behavior. And they think that this is in fact, a job. Yeah. And my point there is, is if that’s the case and people feel normalized, then they’re going to start waving a flag and they’re going to feel that this is righteous and it’s just going to increase even more and more.

[00:25:23] And especially when you have foreign governments that are not exactly the most cooperative with us in helping us, you know, really nail down where this stuff is coming from. At least as far as I’m concerned. I think if you want to be effective within a truly online process, you really going to want to watch your back and keep an eye on things.

[00:25:41] Because to me, it just seems like things are increasing and I hate to, I don’t mean to create a fear factor on it. I’m just saying this has been my observation. It seems like these things are really creeping up.

[00:25:52] Steve Craig: [00:25:52] Yeah, I definitely agree. And, and I’ve, I’ve been receiving calls like that for, for years. And the, the top telco providers, the big [00:26:00] cell phone companies, they’ve tried to put in spam blockers for awhile.

[00:26:03] I was getting a lot of the spam, likely a warnings and I, okay, good. Not, not gonna answer that. I’ve been getting a call every day for the last three weeks. About a roofing company that, Hey, you qualify for a roofing program. I call back, I try to, you know, I’m in the, do not call list. It’s a different number every single time.

[00:26:22] And I can’t, I can’t block it. So I think what we’re seeing is this democratization of technology, where these companies they’re fraud companies, but they set up shop as if they’re a technical support or multi-level marketing firm or, or, or something they establish. In countries like India, the Philippines, and they are creating employment for individuals there that may be really don’t care for them.

[00:26:49] They’re like, well, this just seems weird to be doing, but it’s legitimate. They have an office. Like you don’t feel.

[00:26:57] Joel Kennedy: [00:26:57] Maybe do some legit work in there, right? Maybe it’s [00:27:00] a combination of some legit contracts and some bogus contracts. Yeah.

[00:27:04] Steve Craig: [00:27:04] Yeah. But they, they’re getting more and more sophisticated with phishing attacks.

[00:27:08] So fishing generally is when it’s a fishing with a, with a pH they’re fishing for a victim, the most common way they start. Is by sending emails to try to get you to reply. Sometimes they’ll make the emails look like they come from a reputable company. It looks like a PayPal or maybe an Amazon. They want to hook you and get you to do some activity that will eventually benefit them in some way, either.

[00:27:33] They’re going to trick you. To mewling money or they’re going to trick you and to giving them VPs in access or remote access to your, your, your PC. And they’re going to hijack you and say, oh, I can fix this virus if you pay me $200. So these phishing attacks have been occurring for years and they prey on the individuals that are less tech savvy that are not hip to these schemes.

[00:27:54] And unfortunately this becomes younger individuals and older individuals that just don’t have the training on [00:28:00] it as identity information. Is out on the, on the web. We’re seeing spear phishing attacks, spear phishing is one there looking at you, Joel. And they’re understanding everything about you.

[00:28:11] They’re an analyst where you live, they’re going into social media to see who you’re connected with. They’re mapping you on. Maybe it’s a whiteboard or a piece of paper or something, but they know everything about you. And so they will attempt to trick you into maybe a it’s through a fake Facebook profile that looks like you.

[00:28:31] And he said, Hey, I’m stuck in Tiawana. Joel, can you send me 50 bucks? I need to get, get across the border, like oh, sure. You know, so people do that. And so they’re getting more and more aggressive. They’re getting more and more sophisticated. So not just worrying about how we prove identity between a financial institution and a consumer, but how do we prove I did it?

[00:28:49] Between each other without saying, Hey, just call me, let me verify this as you. Um, that’s really, unless you, you, you, uh, you know, have that [00:29:00] conversation, you might get tricked into it and they make money. Like th this is the industry. Otherwise they wouldn’t set up these operations to perpetrate it.

[00:29:08] Joel Kennedy: [00:29:08] Right.

[00:29:08] You just get really, really embarrassed like that man, TTO guy from the chargers that got. I guess he had a girl that he fell in love with, but on the other end of the, of the, of the computer, it was, it was not a girl like a phony.

[00:29:25] Steve Craig: [00:29:25] I think that what do they call that? I think that’s the cat cat fishing or for romantic purposes, but that happens to them.

[00:29:33] And the whole ecosystem of online dating these days is filled with either fake profiles. Playing tricks on each other. And it’s like, the integrity of identities is Nevermore more important than it is. I

[00:29:48] Joel Kennedy: [00:29:48] think we need an Amish president that will just run on a mandate of idle hands are the devil’s workshop, because I think we all just need more to do more constructive stuff

[00:29:57] Steve Craig: [00:29:57] to do.

[00:29:58] Yeah. These fraudsters [00:30:00] is organized criminal networks. What they’re doing with the money is in many cases, their funnel funding funneling it into activities like, Hey, the drug. Or human trafficking or terrorism. So to them, this is what they want to do. Right. They have whatever reasons. And then of course there are people trying to rip you off that maybe live down the street that are just trying to get some free money and that’s certainly happening.

[00:30:24] It’s definitely a problem. And with this last year in the pandemic, we’ve seen all the press with unemployment, billions of dollars. Lost to overseas activities of people, impersonating individuals. I’m on LinkedIn. Hey, I’ve, I’ve just lost my job. People see those messages. Great. I’m going to file for unemployment for, for Joel before he has a chance to, and then, you know, the, the unemployment agencies, like they don’t have good systems for that as well.

[00:30:52] So it’s

[00:30:53] Joel Kennedy: [00:30:53] unreal. They give you like a little a bank card. So I mean, you know, as long as I have that card and I have the pen, it’s not going

[00:30:59] Steve Craig: [00:30:59] out. [00:31:00] Yeah. Uh, I, I imagine, uh, getting a tax bill for benefits, you never received, maybe you were still employed the whole time and you were never in that category. So it’s a, I guess you could, you could

[00:31:12] Joel Kennedy: [00:31:12] say, look, prove to that.

[00:31:14] I actually got the money. I never, well, I guess you could take it out as cash and then you’d be like, well, you took out all this cash. I don’t know, but that sticky Steve, you’re going to be, and thank you for the support of the, of the trade group. You’ll be at the national automotive finance association annual conference.

[00:31:29] It’s our 25th anniversary silver celebration. And that’s going to be at the end of August through early September in Plano, Texas, Steve, you’re going to be joining us on some of our fraud tracks, and we’re going to be talking more about. Stuff like credit washing, et cetera. Some of the things that you’re very knowledgeable and definitely looking forward to having you there and for folks that want to kind of connect with you, I’m assuming this is, this is definitely going to be released before the conference.

[00:31:57] If it, for folks that want to learn more Steve, or maybe just pick your [00:32:00] brain, that’s the, one of the things, folks that I need to make sure you understand, I’ve noticed particularly within the fraud space and then guys like Steve, you know, I think it comes down to the individually. Very open to having conversations, not constantly looking at the clock like these are guys that like to build solutions and me in sales as well with Nora.

[00:32:19] I’ve got a couple of clients prospects, one, one that signed, but, but the others have a prospect a couple more where they’re really letting me engineer an entire solution that involves the full scale through from, from the application, through the credit evaluation all the way through servicing. And we have some cool stuff at Northridge and some cool extensions, et cetera, but what it gives me as a satisfaction, being able to consult and put a little footprint there.

[00:32:43] And I think Steve is very much the same. And you owe it to yourself to reach out to Steve. So Steve, you folks need to get ahold of you or want to kind of pick your brain on some of this stuff. We covered a lot of ground, but, but what’s the best way for folks to kind of reach out to

[00:32:56] Steve Craig: [00:32:56] you? Yeah, absolutely.

[00:32:58] I think the easiest is through [00:33:00] LinkedIn. So just go, go into the search box there and type Steve Craig. Let me just three, three words should bring up my profile. I could, uh, share my, my, my email address too, if you put it in the concept there. Um, but let’s connect at the show. I’m really excited about that.

[00:33:16] And I recall going to one a few years ago, uh, with your job. And it was an amazing group of, of individuals that are all trying to, to solve similar problems. And it’s, it’s funny to see competitors there, right? These are, these are companies are competing for customers and loans, even car manufacturers, uh, and their captive lending arms are there.

[00:33:38] We all want that. We want to make sure good customers get access to great financial products and get vehicles and go on with their life. And we want to stop fraud. So there’s a higher level purpose here beyond just, you know, doing business and making transactions happen. It’s to stop the bad guys because where this money goes is, is unacceptable.

[00:33:55] So yeah, LinkedIn email, I think those are the best ways. If you want more information about the [00:34:00] company I work at now, just go to and check it out and I’m happy to tell you. Yeah, that’s

[00:34:06] Joel Kennedy: [00:34:06] great. And Steve, thanks for mentioning that, you know, that that was the spirit and the magic behind fraud Friday had just a great deal to do with the great people, such as yourself.

[00:34:15] Really. Open-minded totally fine. Having conversations about clients or with. With competitors there, you know, obviously we all adhere to anti-trust type stuff, so we’re not going to do anything, you know, outside the box, but look, fraud hurts everybody. And you know, it’s kind of a, you know, rising tides raise all the boats type thing.

[00:34:35] I think we know that. And that’s really the basis of, you know, why we’re talking today, why you’re going to be at the NAF. You know, we’re really looking to make sure that we’re getting the education out. People understand what’s going on. The fact is. The percentage of business that was done completely online today versus the same time, even last year in the middle of the pandemic.

[00:34:56] I think we have so many more operators that are mobilized [00:35:00] and need to think about putting this in line, right? Some kind of fraud detection, some kind of fraud evaluation, putting it in line with that process, particularly if they’ve really stepped away. From the old touch and feel PaperCut style of underwriting, where you really are pouring over everything.

[00:35:17] And you’ve got about four different ways to audit every single piece of information you really want to automate this stuff. There are ways to do it where you can grab even greater value. Right? When you think about grabbing consortium related statistics versus just buying. Right, because I’m gonna, I’m going to impose bias right.

[00:35:35] Through how I market, if I market only in Latino markets and in Spanish, I’m going to get that clientele. Right. So, you know, if I, if I just, if I never say anything in Spanish and I have no Spanish people on my floor, I’m probably not going to be. Really utilized by the folks that deal with the Spanish speaking clientele.

[00:35:54] So point is, is, um, is I love, I love, I love Steve. I love having you [00:36:00] on. I love, uh, I love, I can’t wait until we get to the NAF conference and yeah, let me, let me, let me let you get the last word. I mean, for, for the conference, like, we’re going to talk a little bit about credit washing, et cetera, anything, anything you kind of want to throw in as a closing thought or comment, you know, related.

[00:36:17] Steve Craig: [00:36:17] Most definitely. And I touched on this this earlier is to really think about credit risk and identity risk as two different problems to solve. Right? The identity risk typically in lending is looked at last, or these are the stipulations. These are the conditions. It’s just prove who this person is. But look up, look, look at that upfront and do that either in parallel with a credit process or, or ahead of the credit process.

[00:36:41] So you make sure. This person really exists, make sure it’s the person they claim to be. Make sure you can do business with this person. And if you need to take it to the extreme of having them take a picture of their identity document and a selfie, do that in a way where the friction of the transaction matches with the consumer [00:37:00] expectation.

[00:37:00] And this is, this is new to, to automotive and I’ve, I’ve, I’ve talked with a lot, a lot of people in the space. It’s like, well, we don’t really have. A fraud problem without people are misrepresenting information. It’s more first party. Now, chances are you have synthetics on your books. Chances are someone who’s impersonated got the car, took the car over the border or sold it before you could figure it all out.

[00:37:21] So just that would be my final point is I think about those differently. Let’s have the dialogue in Texas at the conference and let’s figure out how to.

[00:37:30] Joel Kennedy: [00:37:30] Outstanding. Thanks Steve Craig of soak cure. Thank you so much for being on the pod today. I

[00:37:36] Steve Craig: [00:37:36] appreciate it. Have a great day. The

[00:37:38] Joel Kennedy: [00:37:38] consumer five podcast has been brought to you by Northbridge loan software.

[00:37:42] That accelerates change. We’d also like to thank the national automotive finance association, the only trade association, exclusively serving the non-prime auto financing industry. [00:38:00]

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