- 1Small funders see fraud in 11.8% of applications on average, over double the rate for larger funders.
- 2MoneyThumb says only under 5% of fraud is now visible to the human eye, versus 80-85% in 2020.
- 3Some fraudsters take escalating loans, repay for a while, then default on the largest.
Small funders with no fraud tools face long odds, says MoneyThumb CEO Ryan Campbell. A recent survey by MoneyThumb with a trade publication found smaller funders see fraud in 11.8% of applications on average, more than double the rate at larger funders. Altered documents once fell to experienced underwriters, but widely available AI has made today's fraud hard to see.
Human detection has collapsed
When MoneyThumb built its Thumbprint technology in 2020, Campbell said, about 80 to 85% of fraudulent bank statements were obvious on sight. Now, he said, the share he can identify with the eye alone is under 5%. Thumbprint is MoneyThumb's patented fraud detection tool and plugs into any industry CRM.
Paying accounts can be fraudulent
An immediate default used to be the first sign that a fraudulent application had gotten through. Campbell said accounts in good standing can be fraudulent too, describing a pattern where a borrower takes a small loan, then a slightly larger one, and then defaults on the third, biggest loan.
Statements can look clean while transaction descriptions have been edited, so third-party loan deposits appear as revenue or round-trip payments with the owner's personal account are relabeled as daily sales. The numbers and statements are real, but what counts as revenue is obscured. Approved on misleading metrics, such borrowers may keep paying for a while to win larger offers.
MoneyThumb has run portfolio analyses for funders, reviewing all their statements and funded deals, and Campbell said many are surprised to find fraudulent paying accounts on their books.
technology has just absolutely created an environment where people can create fraud in a way that they never could.
Catch it early
Early detection cuts underwriting cost, saves time on deals that will not close and spares referral partners a late-stage kill. Campbell said the real expense is staff working a fraudulent deal for days, and that Thumbprint flags it at the start of the process.
Source reporting: deBanked.
