Foundation Study Examines the Prevention, Detection and Impact of Fraud on Industry

A recent study released by the Equipment Leasing & Finance Foundation has analyzed fraud in the equipment leasing and finance industry, focusing on prevention, detection, and impact. The study found a rise of 10% or more in various fraud types, including identity theft and first- and third-party borrower fraud, among equipment finance companies in the past two years.

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. The financial toll of these frauds varies across small, medium, and large lenders, and 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.

Preventive strategies are vital to every company as they are exponentially more effective than investigative approaches. They include analyzing credit over-extensions, scrutinizing bank statements, verifying state-issued documents, and employing third-party solutions for identity verification. Fraud is a constantly evolving issue in the equipment leasing and finance industry. Lenders must stay ahead of the game by adapting and being vigilant in their fraud management practices to safeguard the industry effectively. This study highlights the need for continuous improvement in fraud management practices.

If your company plans to lease equipment this year, it is essential to ensure that you protect yourself. To do this, you should follow these guidelines: conduct proper background checks, verify physical addresses and listings in trade registers, perform credit checks, obtain bank references, audit accounts analysis, review payment history, and, for some, conduct share-register reviews. It is recommended that you do these checks periodically, even if the client has made legitimate leases in the past.

Before moving forward with equipment purchases, talk to one of our industry experts, and let us help you find the right solution.
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