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New research shows that on an average day, about 4.5% of people who take an unsecured personal loan go back for seconds at other lenders later that day. “Loan stacking,” is problematic as borrowers who take out a second loan within 15 days are 4x as likely to be later identified as fraudsters. A 3rd loan makes borrowers 10 x as likely to be frauds.
Avant, the Chicago-based online lender, also recently began using its mobile app for new borrower applications, which allows it to capture the photo of the borrowers’ ID as an element in its verification process, according to the company. Not all online lenders use a mobile app for new borrowers. At LendingClub borrowers apply through a website, and are called on the phone to confirm information or request additional documents when the lender deems it necessary. Prosper works with software company The ID Co. to help confirm applicants’ identities with their bank accounts, as one tool to identify customers.
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