Loan Stacking Fraud

After the recession in 2008, banks and other lending institutions took a very aggressive approach to lending, by becoming more rigorous in managing credit risk by how a person can pay and if their credit is where they deem it be “acceptable” to their business practices. In the 11 years since, these lending institutions have relaxed their reigns just a bit to help facilitate economic stimulation. With a gun-shy market, many lending companies have resorted to competitive marketing strategies to lay claim to their stake in the economic bounce back. It’s no surprise that so have con artists and fraudsters.

One way that criminals have been able to clinch their hooks into lending world is with a con called Loan Stacking Fraud. Loan stacking fraud occurs when an applicant applies and is approved for multiple loans within a few days or even a few hours, allowing the fraudster to collect and disappear before the lender recognizes the deception. The information used for these loans are typically not the fraudster’s true identity but compromised data they have stolen or purchased. The money used from these crimes are then typically used to fund other criminal activity both physical and virtual. According to TransUnion, loans that are stacked are four times more fraudulent than individual loans. Lenders have begun to take additional measures to reduce their risk such as adding additional control measures in vetting prospective customers, increasing their due diligence period to allow time for other lenders to report the loan and reporting newly opened loan sooner.




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