Washington, DC, January 29, 2024 – Increases of 10% or more in incidents of fraud types, including identity theft and first- and third-party borrower fraud, have occurred among equipment finance companies over the last two years. A new study, “Fraud in the Equipment Leasing and Finance Industry,” released by the Equipment Leasing & Finance Foundation (Foundation) analyzes fraud in the equipment leasing and finance industry with an examination of the multifaceted nature of fraud, its financial impacts, evolving challenges faced by lenders of various sizes, and solutions to address and mitigate fraud.
The study was commissioned by the Foundation and prepared by Kassem Consulting and Datos Insights. It utilizes a multipronged approach, including a survey of Equipment Leasing and Finance Association (ELFA) members, in-depth interviews with executives from varying sizes of lending institutions, and an analysis of current fraud trends.
Among the key findings of the study are
- Fraud types and trends – The study identified various fraud types prevalent in the industry, including identity theft, use of legitimate credentials by criminal enterprises, first-party fraud by borrowing company owners, impersonation fraud, and fraudulent invoice creation, among others.
- Financial impact – The financial toll of these frauds varies across small, medium, and large lenders. A notable percentage of respondents either do not track or are unaware of the specific financial impacts, indicating a gap in fraud management advancements and prevention.
- Fraud detection and prevention techniques – Preventive strategies are vital to every company as they are exponentially more effective than investigative approaches. They include analyzing credit overextensions, scrutinizing bank statements, verifying state-issued documents, and employing third-party solutions for identity verification.
- Institutional confidence and solutions – Institutions have a mixed level of confidence in their ability to manage fraud losses. Adopting advanced solutions like artificial intelligence (AI) and machine learning is seen as a future direction for more effective fraud mitigation.
“Fraud in the equipment leasing and finance industry is ever-changing, and this study is designed to help businesses meet the challenges to stay ahead of it,” said Valerie Gerard, Foundation Research Committee Chair and Co-CEO of The Alta Group. “The study reveals current fraud practices and comprehensive strategies, including types of solutions and advanced technologies companies can deploy to combat evolving fraud threats effectively.”
Download the full report at http://tinyurl.com/yn68hz6v.
All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.
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The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.
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Media contact: Kelli Nienaber, knienaber@leasefoundation.org