Organized criminal networks are moving away from stealing cars towards defrauding auto lenders, according to a new report from the National Insurance Crime Bureau (NICB).
It estimated fraud exposure in US auto lending at $10.4 billion and expects losses to rise further in 2026.
“Vehicle finance fraud has evolved from isolated credit misrepresentations into an organized, digital criminal industry that touches dealerships, lenders and insurers,” said Timothy Slater, NICB’s chief operating officer.
The shift comes as traditional vehicle theft falls sharply. US vehicle thefts dropped 23% in 2025 to 659,880, the lowest level in decades, following a 17% decline in 2024, according to NICB data. NICB has since reported a further 21% decline in the first half of 2026.
NICB said first-party fraud now accounts for nearly 70% of vehicle finance fraud. In these schemes, individuals or rings misrepresent their income, employment or intention to repay, using either their own identities or synthetic ones. Synthetic identities, which combine real and invented personal details, power an estimated 80% to 85% of identity-based vehicle financing schemes.
Borrowers flagged as likely synthetic identities default at 12.5 times the rate of typical consumers, with average losses of $22,000 to $50,000 per case. That is far more than typical losses on credit cards or personal loans.
The report also highlights “sign-and-walk” rings, which use inflated or AI-generated pay stubs to avoid early default flags. It also points to credit washing, where fraudsters submit forged identity theft affidavits and fake police reports to clear negative credit history and get new auto loans. NICB said suspected credit washing rose 228% between early 2024 and mid-2025.
NICB cited industry studies suggesting up to 24% of auto loan defaults may be linked to fraud, and that 77% of dealerships have seen fraud increase over the past two years.
NICB said a major problem is that federal crime definitions exclude vehicles obtained through fraud and forgery from motor vehicle theft statistics. As a result, the scale of criminal vehicle acquisition is hidden even as reported thefts decline. It is calling for standardized reporting across the industry, and has backed state laws including Oklahoma House Bill 3244, which created aggravated identity theft penalties, and Minnesota H.F. 3826.
For auto insurers, the shift raises the risk of being exposed to vehicles that are fraudulently financed and then reported stolen, burned or abandoned. False theft claims made as part of credit washing can also involve insurers if a claim is filed on a vehicle the fraudster never intended to keep.
Lenders’ collateral protection and gap insurance products are directly exposed when loans default through fraud, as are the insurers that write them. Brokers serving auto dealers and lenders should expect underwriters to look more closely at dealers’ identity verification and fraud controls at renewal.
The data gap matters too. If falling theft figures understate how many vehicles criminals are actually obtaining, insurers’ theft loss trends may not fully reflect the risk, particularly for claims involving vehicles acquired through fraud.
