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of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum
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Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
In 2015, U.S. card issuers raced to start issuing EMV (Europay, Mastercard, and Visa) payment cards to take advantage of the new fraud prevention technology. Counterfeit credit card fraud rose by nearly 40% from 2014 to 2016, (Aite Group, 2017) fueled by bad actors trying to maximize their return on compromised payment card data. Today, we anticipate a similar tsunami of fraud ahead of the Social Security Administration (SSA) rollout of electronic Consent Based Social Security Number Verification (eCBSV). Synthetic identities, defined as fictitious identities existing only on paper, have been a continual challenge for financial institutions. These identities slip past traditional account opening identity checks and can sit silently in portfolios performing exceptionally well, maximizing credit exposure over time. As synthetic identities mature, they may be used to farm new synthetics through authorized user additions, increasing the overall exposure and potential for financial gain. This cycle continues until the bad actor decides to cash out, often aggressively using entire credit lines and overdrawing deposit accounts, before disappearing without a trace. The ongoing challenges faced by financial institutions have been recognized and the SSA has created an electronic Consent Based Social Security Number Verification process to protect vulnerable populations. This process allows financial institutions to verify that the Social Security number (SSN) being used by an applicant or customer matches the name. This emerging capability to verify SSN issuance will drastically improve the ability to detect synthetic identities. In response, it is expected that bad actors who have spent months, if not years, creating and maturing synthetic identities will look to monetize these efforts in the upcoming months, before eCBSV is more widely adopted. Compounding the anticipated synthetic identity fraud spike resulting from eCBSV, financial institutions’ consumer-friendly responses to COVID-19 may prove to be a lucrative incentive for bad actors to cash out on their existing synthetic identities. A combination of expanded allowances for exceeding credit limits, more generous overdraft policies, loosened payment strategies, and relaxed collection efforts provide the opportunity for more financial gain. Deteriorating performance may be disguised by the anticipation of increased credit risk, allowing these accounts to remain undetected on their path to bust out. While responding to consumers’ requests for assistance and implementing new, consumer-friendly policies and practices to aid in impacts from COVID-19, financial institutions should not overlook opportunities to layer in fraud risk detection and mitigation efforts. Practicing synthetic identity detection and risk mitigation begins in account opening. But it doesn’t stop there. A strong synthetic identity protection plan continues throughout the account life cycle. Portfolio management efforts that include synthetic identity risk evaluation at key control points are critical for detecting accounts that are on the verge of going bad. Financial institutions can protect themselves by incorporating a balance of detection efforts with appropriate risk actions and authentication measures. Understanding their portfolio is a critical first step, allowing them to find patterns of identity evolution, usage, and connections to other consumers that can indicate potential risk of fraud. Once risk tiers are established within the portfolio, existing controls can help catch bad accounts and minimize the resulting losses. For example, including scores designed to determine the risk of synthetic identity, and bust out scores, can identify seemingly good customers who are beginning to display risky tendencies or attempting to farm new synthetic identities. While we continue to see financial institutions focus on customer experience, especially in times of uncertainty, it is paramount that these efforts are not undermined by bad actors looking to exploit assistance programs. Layering in contextual risk assessments throughout the lifecycle of financial accounts will allow organizations to continue to provide excellent service to good customers while reducing the increasing risk of synthetic identity fraud loss. Prevent SID
Assessing the strength of the automotive and mortgage industries has become somewhat of a pastime for those determining the long-term effects of COVID-19. And the early assessment, at least for the automotive industry, should read, “despite significant challenges at the onset of the pandemic, the industry continues to rebound.” While there are many indicators to gauge performance, new and used vehicle registrations are near the top. In April, new and used vehicle registrations were down 50.8 percent and 54 percent, respectively, compared to the previous year—we’ve since seen the numbers slowly return to par. New and used vehicle registrations were down 33.3 percent and 32.4 percent in May; however new registrations were only down 10.6 percent in June, while used registrations saw 0.2 percent growth. It’s difficult to pinpoint the exact reasoning for the gradual return in vehicle sales over the past few months, but we would be remiss not to acknowledge the apparent impact of automaker incentives. The option for car shoppers to take advantage of low rates or cash incentives has certainly spurred the industry forward—it’s even had an impact on how car shoppers are purchasing vehicles. In March, loans accounted for 55.7 percent of transactions; that percentage have since grown in April (63.8 percent), May (66.1 percent) and June (65.2 percent). In addition, leasing has hovered around 23 and 24 percent during April-June; well-below the 30 percent mark over the past several years—however, that may be attributed to the inability of so many consumers to visit a dealership to trade-in leases, rather than car shoppers shifting away from the product. Consumers opt for affordability Not unlike the car-shopping environment prior to the pandemic, consumers continue to choose the most vehicle at the most affordable price. Automaker incentives have likely shifted many prime consumers back into the new vehicle market. In April, prime borrowers accounted for 71.1 percent of new vehicle loans, while in May, that number jumped to 75.2 percent. In addition to the automaker incentives, low rates, less cash required upfront and the extension of loan terms have kept monthly payments at similar levels to the months leading up to the pandemic. In March, the average new loan amount was $33,788 and had an average monthly payment of $565. In April, the loan amount jumped to $36,556, but only saw a slight increase in monthly payment to $579—a similar pattern followed in May. While some consumers are unable to re-enter the vehicle market, others may have a newfound need. It’s important for consumers to understand the options available to them. Similarly, the more insight lenders have into the current market, the better positioned they will be to present car shoppers with financing options that meet consumers’ unique circumstances.
Achieving collection results within the subprime population was challenging enough before the current COVID-19 pandemic and will likely become more difficult now that the protections of the Coronavirus Aid, Relief, and Economic Security (CARES) Act have expired. To improve results within the subprime space, lenders need to have a well-established pre-delinquent contact optimization approach. While debt collection often elicits mixed feelings in consumers, it’s important to remember that lenders share the same goal of settling owed debts as quickly as possible, or better yet, avoiding collections altogether. The subprime lending population requires a distinct and nuanced approach. Often, this group includes consumers that are either new to credit as well as consumers that have fallen delinquent in the past suggesting more credit education, communication and support would be beneficial. Communication with subprime consumers should take place before their account is in arrears and be viewed as a “friendly reminder” rather than collection communication. This approach has several benefits, including: The communication is perceived as non-threatening, as it’s a simple notice of an upcoming payment. Subprime consumers often appreciate the reminder, as they have likely had difficulty qualifying for financing in the past and want to improve their credit score. It allows for confirmation of a consumer’s contact information (mainly their mobile number), so lenders can collect faster while reducing expenses and mitigating risk. When executed correctly, it would facilitate the resolution of any issues associated with the delivery of product or billing by offering a communication touchpoint. Additionally, touchpoints offer an opportunity to educate consumers on the importance of maintaining their credit. Customer segmentation is critical, as the way lenders approach the subprime population may not be perceived as positively with other borrowers. To enhance targeting efforts, lenders should leverage both internal and external attributes. Internal payment patterns can provide a more comprehensive view of how a customer manages their account. External bureau scores, like the VantageScore® credit score, and attribute sets that provide valuable insights into credit usage patterns, can significantly improve targeting. Additionally, the execution of the strategy in a test vs. control design, with progression to successive champion vs. challenger designs is critical to success and improved performance. Execution of the strategy should also be tested using various communication channels, including digital. From an efficiency standpoint, text and phone calls leveraging pre-recorded messages work well. If a consumer wishes to participate in settling their debt, they should be presented with self-service options. Another alternative is to leverage live operators, who can help with an uptick in collection activity. Testing different tranches of accounts based on segmentation criteria with the type of channel leveraged can significantly improve results, lower costs and increase customer retention. Learn About Trended Attributes Learn About Premier Attributes
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With the National Automobile Dealers Association (NADA) Show set to kickoff later this week, it seemed fitting to explore how the shifting dynamics of the used vehicle market might impact dealers and buyers over the coming year. Shedding light on some of the registration and finance trends, as well as purchasing behaviors, can help dealers and manufacturers stay ahead of the curve. And just like that, the Special Report: Automotive Consumer Trends Report was born. As I was sifting through the data, one of the trends that stood out to me was the neck-and-neck race between Millennials and Gen X for supremacy in the used vehicle market. Five years ago, in 2019, Millennials were responsible for 33.3% of used retail registrations, followed by Gen X (29.5%) and Baby Boomers (26.8%). Since then, Baby Boomers have gradually fallen off, and Gen X continues to close the already minuscule gap. Through October 2024, Millennials accounted for 31.6%, while Gen X accounted for 30.4%. But trends can turn on a dime if the last year offers any indication. Over the last rolling 12 months (October 2023-October 2024), Gen X (31.4%) accounted for the majority of used vehicle registrations compared to Millennials (30.9%). Of course, the data is still close, and what 2025 holds is anyone’s guess, but understanding even the smallest changes in market share and consumer purchasing behaviors can help dealers and manufacturers adapt and navigate the road ahead. Although there are similarities between Millennials and Gen X, there are drastic differences, including motivations and preferences. Dealers and manufacturers should engage them on a generational level. What are they buying? Some of the data might not come as a surprise but it’s a good reminder that consumers are in different phases of life, meaning priorities change. Over the last rolling 12 months, Millennials over-indexed on used vans, accounting for more than one-third of registrations. Meanwhile, Gen X over-indexed on used trucks, making up nearly one-third of registrations, and Gen Z over-indexed on cars (accounting for 17.1% of used car registrations compared to 14.6% of overall used vehicle registrations). This isn’t surprising. Many Millennials have young families and may need extra space and functionality, while Gen Xers might prefer the versatility of the pickup truck—the ability to use it for work and personal use. On the other hand, Gen Zers are still early in their careers and gravitate towards the affordability and efficiency of smaller cars. Interestingly, although used electric vehicles only make up a small portion of used retail registrations (less than 1%), Millennials made up nearly 40% over the last rolling 12 months, followed by Gen X (32.2%) and Baby Boomers (15.8%). The market at a bird’s eye view Pulling back a bit on the used vehicle landscape, over the last rolling 12 months, CUVs/SUVs (38.9%) and cars (36.6%) accounted for the majority of used retail registrations. And nearly nine-in-ten used registrations were non-luxury vehicles. What’s more, ICE vehicles made up 88.5% of used retail registrations over the same period, while alternative-fuel vehicles (not including BEVs) made up 10.7% and electric vehicles made up 0.8%. At the finance level, we’re seeing the market shift ever so slightly. Since the beginning of the pandemic, one of the constant narratives in the industry has been the rising cost of owning a vehicle, both new and used. And while the average loan amount for a used non-luxury vehicle has gone up over the past five years, we’re seeing a gradual decline since 2022. In 2019, the average loan amount was $22,636 and spiked $29,983 in 2022. In 2024, the average loan amount reached $28,895. Much of the decline in average loan amounts can be attributed to the resurgence of new vehicle inventory, which has resulted in lower used values. With new leasing climbing over the past several quarters, we may see more late-model used inventory hit the market in the next few years, which will most certainly impact used financing. The used market moving forward Relying on historical data and trends can help dealers and manufacturers prepare and navigate the road ahead. Used vehicles will always fit the need for shoppers looking for their next vehicle; understanding some market trends will help ensure dealers and manufacturers can be at the forefront of helping those shoppers. For more information on the Special Report: Automotive Consumer Trends Report, visit Experian booth #627 at the NADA Show in New Orleans, January 23-26.
The automotive industry is constantly changing. Shifting consumer demands and preferences, as well as dynamic economic factors, make the need for data-driven insights more important than ever. As we head into the National Automobile Dealers Association (NADA) Show this week, we wanted to explore some of the trends in the used vehicle market in our Special Report: State of the Automotive Finance Market Report. Packed with valuable insights and the latest trends, we’ll take a deep dive into the multi-faceted used vehicle market and better understand how consumers are financing used vehicles. 9+ model years grow Although late-model vehicles tend to represent much of the used vehicle finance market, we were surprised by the gradual growth of 9+ model year (MY) vehicles. In 2019, 9+MY vehicles accounted for 26.6% of the used vehicle sales. Since then, we’ve seen year-over-year growth, culminating with 9+MY vehicles making up a little more than 30% of used vehicle sales in 2024. Perhaps more interesting though, is who is financing these vehicles. Five years ago, prime and super prime borrowers represented 42.5% of 9+MY vehicles, however, in 2024, those consumers accounted for nearly 54% of 9+MY originations. Among the more popular 9+MY segments, CUVs and SUVs comprised 36.9% of sales in 2024, up from 35.2% in 2023, while cars went from 44.3% to 42.9% year-over-year and pickup trucks decreased from 15.9% to 15.6%. 2024 highlights by used vehicle age group To get a better sense of the overall used market, the segments were broken down into three age groups—9+MY, 4-8MY, and current +3MY—and to no surprise, the finance attributes vary widely. While we’ve seen the return of new vehicle inventory drive used vehicle values lower, it could be a sign that consumers are continuing to seek out affordable options that fit their lifestyle. In fact, the average loan amount for a 9+MY vehicle was $19,376 in 2024, compared to $24,198 for a vehicle between 4-8 years old and $32,381 for +3MY vehicle. Plus, more than 55% of 9+MY vehicles have monthly payments under $400. That’s not an insignificant number for people shopping with the monthly payment in mind. In 2024, the average monthly payment for a used vehicle that falls under current+3MY was $608. Meanwhile, 4-8MY vehicles came in at an average monthly payment of $498, and 9+MY vehicles had a $431 monthly payment. Taking a deeper dive into average loan amounts based on specific vehicle types—as of 2024, current +3MY cars came in at $28,721, followed by CUVs/SUVs ($31,589) and pickup trucks ($40,618). As for 4-8MY vehicles, cars came in with a loan amount of $22,013, CUVs/SUVs were at $23,133, and pickup trucks at $31,114. Used 9+MY cars had a loan amount of $19,506, CUVs/SUVs came in at $17,350, and pickup trucks at $22,369. With interest rates remaining top of mind for most consumers as we’ve seen them increase in recent years, understanding the growth from 2019-2024 can give a holistic picture of how the market has shifted over time. For instance, the average interest rate for a used current+3MY vehicle was 8.0% in 2019 and grew to 10.2% in 2024, the average rate for a 4-8MY vehicle went from 10.3% to 12.9%, and the average rate for a 9+MY vehicle increased from 11.4% to 13.8% in the same time frame. Looking ahead to the used vehicle market It’s important for automotive professionals to understand and leverage the data of the used market as it can provide valuable insights into trending consumer behavior and pricing patterns. While we don’t exactly know where the market will stand in a few years—adapting strategies based on historical data and anticipating shifts can help professionals better prepare for both challenges and opportunities in the future. As used vehicles remain a staple piece of the automotive industry, making informed decisions and optimizing inventory management will ensure agility as the market continues to shift. For more information, visit us at the Experian booth (#627) during the NADA Show in New Orleans from January 23-26.
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typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.