FlexPath warns dealers about prequal fraud driven by AI

Fintech solutions provider FlexPath DXP’s CEO, Tarry Shebesta, issued a public service announcement on July 30, warning dealers and lenders in the auto and powersports industries about a critical fraud pattern targeting credit prequalification web apps.

“In a recent real-world incident, hundreds of prequal submissions were completed in a matter of minutes, each using completely different names, addresses, and phone numbers,” Shebesta says. “Every one of these fraudulent submissions successfully triggered a credit bureau inquiry.”

He went on to say that the behavior strongly suggests that bots or AI were behind the identity validation attacks, where bad actors test real-looking data to confirm who qualifies for credit.

Shebesta says these AI-driven attacks should be concerning to dealers for these key reasons:

• Consumers may have credit pulled without their consent
• Dealers and lenders risk funding fraud or facing legal exposure
• Platforms are unintentionally enabling identity validation for criminals
• No traditional CAPTCHA, rate-limiting, or duplicate suppression tools caught the fraud.

Next, Shebesta suggests what any organization offering online prequalification should immediately do:

• Review submission logs for rapid-fire, unique submissions
• Audit credit bureau activity for unexplained spikes or inquiry complaints
• Evaluate the identity was verified before the credit is pulled

FlexPath says VeriQual, its patent-pending, identity-first prequal solutions tool, verifies consumer identity in real time, before any credit pull occurs.

“While the focus of this PSA is to alert the industry to the threat,” Shebesta says. “We are happy to provide support to any platform, dealer group, lender, or regulator seeking to address this issue.”