Auto Fraud Losses Higher Among Those in Traditionally Better Risk Tiers, TransUnion Analysis Finds

Credit washing emerges as a growing concern as synthetic fraud and misrepresentation tactics evolve

LAS VEGAS, Oct. 16, 2025 (GLOBE NEWSWIRE) -- New analysis from TransUnion (NYSE: TRU) released at this week’s Auto Finance Summit reveals that fraud-related charge-off losses in auto lending are not only significant—they are dramatically higher than those seen in other consumer credit product types. Synthetic identity fraud, which occurs when real and fake information are combined to create a new, fictitious identity with dishonest or criminal intent, continues to drive significant financial losses. At the same time, however, a parallel trend—credit washing—is emerging as a complementary threat. Both tactics obscure actual consumer risk, leading to elevated losses even among credit tiers traditionally associated with lower risk.

For loans originated from March through September 2023, average dollar losses observed two years later due to fraud in auto loans were significantly higher than in other loan types. Fraud losses in auto loans were 21 times greater than those in credit cards, and six times greater than those in unsecured personal loans (UPLs) originated during the same period. At the same time, the charge-off percentage from fraud was actually higher among those in credit score risk tiers traditionally considered lower risk.

The elevated loss rates in auto lending are driven by a combination of factors, including the larger loan amounts typical of auto financing and the evolving tactics used by suspected fraudsters to exploit vulnerabilities in the lending process. Interestingly, fraud incidence rates in auto lending actually lag behind those for credit card and UPLs for third-party and synthetic fraud. However, dollars lost are significantly higher across all credit risk tiers.

Auto fraud losses are also unique in that they are heavily driven by prime and better risk tiers – consumers generally considered to be lower risk. Among that set of consumers, those flagged by TransUnion fraud prevention solutions as more likely to be synthetic, exhibited a bad rate 12.5 times higher than other consumers, with average balance losses exceeding $22K per consumer and well over $50K among super prime consumers. In contrast, synthetic fraud losses in the UPL and card segments were significantly lower, both in terms of frequency and financial impact.

Auto fraud losses averaged just under $20K, well above UPL and credit card averages

Source: TransUnion US consumer credit database
VantageScore® 4.0 risk ranges: Subprime = 300-600, Near prime = 601-660, Prime = 661-720, Prime plus = 721-780, Super prime = 781+

“As the auto lending landscape becomes more digital and interconnected, the risk of fraud is no longer isolated to fringe cases—it’s becoming a systemic challenge that requires proactive, data-driven and innovative solutions,” said Satyan Merchant, senior vice president, auto and mortgage business leader at TransUnion. “Our synthetic fraud scoring models reveal that high-risk behavior can be masked behind seemingly strong credit profiles. This makes it harder to ensure that each person is reliably represented in the auto lending marketplace. Lenders must be equipped with tools that go beyond traditional credit risk indicators to uncover hidden fraud signals before they result in costly losses.”

Credit Washing Alters Perceptions of Risk

In addition to exploring dynamics in synthetic fraud, TransUnion’s analysis highlights the rise of credit washing. Credit washing typically involves consumers fraudulently disputing legitimate, accurate data – often delinquent or charged-off accounts – to temporarily improve their credit profiles. One example of this can be seen when consumers falsely claim they are victims of identity fraud. This behavior is particularly concerning because it can create a false impression of borrower credit quality, leading lenders to make lending decisions based on inaccurate perceptions of risk.

Charge-off rates for credit washers with super prime risk scores were comparable to those for non-credit washers in the near prime tier, revealing a troubling disconnect between perceived and actual risk. These consumers may appear highly creditworthy at origination, but their subsequent performance data tells a different story—one that poses significant risk to lenders relying solely on traditional scoring methods.

Super prime credit washers charge-off at a rate similar to other near-prime auto consumers

Source: TransUnion US consumer credit database
VantageScore® 4.0 risk ranges: Subprime = 300-600, Near prime = 601-660, Prime = 661-720, Prime plus = 721-780, Super prime = 781+

“Credit washing is a silent disruptor in the lending space,” said Merchant. “It makes it harder than ever for lenders to distinguish between genuine and manipulated profiles. What’s most concerning is that this behavior is increasingly prevalent among consumers in lower-risk credit tiers, where lenders typically expect better credit performance. To stay ahead, lenders must integrate fraud-specific attributes and verification tools that can detect these anomalies before they impact portfolio performance.”

To learn more about how TransUnion fraud prevention solutions can help auto lenders detect synthetic identities and instances of credit washing to help avoid fraud and prevent fraud losses, click here.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

http://www.transunion.com/business

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