May 28, 2025

Fraud, Policy Shifts, and EV Financing: What’s Next for Auto Lenders?

Show Notes
Transcript

As the auto finance industry faces mounting regulatory scrutiny and increasingly sophisticated fraud tactics, lenders are working together to navigate risk, improve compliance, and better serve today’s borrowers.

In this episode, recorded at CBA Live 2025 in Orlando, host Matt Snow sits down with Fabien Thierry, Head of Indirect Lending at Bank of America, and Mike Gilbert, Director of Consumer Lending at Associated Bank. Serving as chair and co-chair of the CBA Auto Finance Committee, Fabien and Mike discuss how the committee is helping lenders respond to the most urgent challenges in auto finance—from new CFPB directives to the rising threat of synthetic identity fraud—through collaboration, data-driven strategies, and shared best practices.

Join us as we discuss:

The impact of evolving federal and state regulations on lender operations and how the committee is driving policy advocacy
The surge in synthetic identity and first-party fraud, and the tools being deployed to detect and prevent financial losses
Financing complexities tied to electric vehicles, including rising costs, residual value concerns, and infrastructure limitations
How digital lending innovations are improving decisioning speed, borrower transparency, and overall loan experience
Why industry-wide coordination—between lenders, dealers, and tech providers—is essential for managing disruption and delivering value

WEBVTT

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Hey everyone, Matt Snow again here from Upstart live from

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CBA in Orlando, Florida, with Fabian Terry and Mike gilbert

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there from the Auto Committee.

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Thanks for joining me, guys, Thank you for having us.

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Yes, absolutely, Why don't we get started by maybe some

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personal introductions. Where you're working today?

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Absolutely so, Fabian Sierry So. I work for Bank of America.

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I lead the Auto Consumer and Small Business organization. I've

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been with the bank for seventeen years now and various

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capacities and specifically for the CBA. I'm the chair of

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the Auto Committee, and I'm peaced to be here.

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Great.

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Thank you.

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So.

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Mike Gilberton, co chair with Fabian and the Auto Committee,

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currently an associated bank, been there since startup for their

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indirect Auto September twenty one. Prior to that, twenty eight

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years at Key Bank, and then an illustrious start in

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this business at GMAC if you can call that name. Yeah,

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So happy to be here.

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Great, Well, thanks guys. I know you know sometimes we've

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talked with past gasts about getting into banking. Was that

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a childhood dream or like, how did you get into

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the banking world?

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Actually, my my background is actually in the auto space,

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so as not even working for fold back in Europe, gotcha,

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spent ten years with them various capacities, and then I

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droned the banking industry when I moved to the US.

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That was over seventeen years ago, and then more it was,

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say like.

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Four years ago.

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I've been I've been eating but the auto division at

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the bank. So it's kind of like full circle of

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all my head.

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Exactly nice. How about you, Mike, Yes.

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Right out of college, hired a GMAC So it's all

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I've ever known, all I've ever done, and all I've

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ever loved.

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So yeah, great, and that's probably what's brought you both

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to the committee. So maybe first, you know, describe a

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little bit about the committee's role, how you ended up there,

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and it's important importance within the CBA.

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Do you want to go?

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So yeah, I mean it's if you're interested and you

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want to engage, which obviously the two of us here

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we were definitely interested. It's a passion something we love.

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And then we're engaged you would like to participate, like

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a dig into things like to just be a member

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of the committee. And then obviously the more vocal we are,

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the more you want to kind of not take charge,

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but just take some ownership. You kind of elevate to

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these two positions where you've you've got extra responsibilities and duties.

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But it's fun. It's not work right, so's it's a joy.

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It's a pleasure to work with and partner with twenty

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five other auto lenders. We're competitors, but we're respectful, we're friends.

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So it's a great group that we're part of.

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It's a great group of PIO.

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What Mike was saying, I think we just had the

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opportunity to be working. We've community members that are very

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passionate and knowledgeable. We all want the same thing. We

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want to serve our customers. We know and understand THEOTWO industry,

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and so we have the portunity on a monthly business

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to be meeting as a committee cover everything from regulatory

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to you know, new industry trends. Obviously, with the involvement

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of the the CBA, we're able to get connectivity through

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having like different you know, players vendors coming and talking

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to us about the challenges, what they're seeing, and more importantly,

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how can we keep moving the industry forward. And so

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as as the share and the co chair Mike and

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I had the opportunity to be you know, interacting with

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all the bankers and regardless of the size of the banks,

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we we kind of like we have a common agenda

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and we're trying to do the.

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Best for our customers. Yeah.

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Great, it must be something you enjoy if you're giving

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up four hours of a weekend to come and chat

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about these things and meetings together and multiple sessions throughout.

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What are some of the common maybe concerns of members

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today are addressing.

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Yeah, regulatory has been front end center for the last

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couple of years, so we spent a lot of time

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talking about you know, regulatory agencies and and and what

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it means for the industry from the dealer side as

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well as from the consumer impact on the banks. We

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talk about just some of the you know, gap refunds,

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insurance refund to a lot of the topics that the

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CFPB had on their agenda. Those are the type of

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topics that we discuss as as you know with the

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with the rest of the of the bank partners the

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rest will be more centric around fraud. I would say

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it has been kind of like maybe a topic that

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has been growing. Unfortunately, spent a lot of time talking

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about what it means, what we're saying, and how we

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can combat fraud and so again leveraging partners and solution.

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Across the industry to try to advise that issue. And

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the last one, Mike, I think it's just more like

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industry trains what we're saying from like more the topic

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that drives the market forward.

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So electric vehicle was was one topic that we spend

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a lot of time covering in our committee.

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Anything else that you can think.

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About, yeah, I mean it's all it's front and center,

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it's top of mine in real time. So Fabian and

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I do a good job. I'll give us both credit.

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As soon as something comes out. It's the State of

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New York Attorney General came out with, you know, trying

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to form a CFPB. That was out to the members

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within thirty minutes when that was released. So that's just

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one example. As soon as something hits, we put it

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out for everyone, and then when we get together either

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in person or once a month on our team's call,

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we revisit it, We talk about it, try to drill

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into more than Okay, anybody can read the article, right,

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so what does it really? What's it mean? What's it mean?

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And how do we take what it means and put

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it in practice? How do we act on it? Not

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act on it? I mean decho a little bit about

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what Faban mentioned right, regulatory CFPB. You know, we all

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know we've dealt with supervisory highlights. It wasn't the rule

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of how you should have followed things some people believe.

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But nonetheless, you know, where does the CFPB sit now?

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What does it mean for us? How are we digesting that?

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What will happen? You know, you try to crystal ball it.

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If the CFPB isn't in its current state, are the

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states going to come out? What would those look like?

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If you have a national lender, right, and the national

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lender now has to deal with twenty versions of a CFPB,

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what's that look like? Is it easier just to deal

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with one versus twenty? So these are things we talked about,

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Like I said yesterday, Fraudy mentioned, but it's what we

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kind of deep dive into. We don't share trade secrets,

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but yeah, best practices and it's good to just hear

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real time what other folks see around all those topics,

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and there's a lot of them.

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Yeah, I was going to say that's probably now more

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than ever an important role for the committee with the

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pace of change, the uncertainty the state level you mentioned

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is another dimension. Just trying to share the awareness, let

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alone best practices like just get any information out there

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would be important. Absolutely, how do you stay on top

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of those things or get the information?

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Yeah, I mean think about so again I will on

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the regulatory side, just we obviously stay very close to

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to what's happening, not only at the CBA, but we.

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Also leverage other trade organization after.

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NDA to kind of like again just to get get

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get the information. In the end of our members, it's

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it's that it's about communication and transparency. So regulatory is

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definitely one one one topic. But just to answer your question,

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also think about just also the all the digital transformation

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that is happening in the other space. But that is

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also something that that week over I talk about just

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the importance of bringing a third party coming to.

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Talk to us.

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Was our experts in the field are trying to kind

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of have those digital tools that help solving.

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Some of those issues and gaps. Some Yesterday, the conversation.

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During the the CBA event a committee that we were

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we were running, we talk about throw that length and

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we talk about you know, all the f NI products

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and and and the charges and how to stay on

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top of it. There's a lot of activities going to

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that space. There's players there, the planes that are trying

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to solve it. So bringing was was was players in

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front of the committee. Having open conversation where you have

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pretty much representation of the entire landing community is extremely helpful.

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So that's that's that's that's that's what the community hope proc.

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Are you seeing innovation in any one specific space? Is

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fraud something that people are focused on now? Is it

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the experience of the dealership? Is it in the financing?

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Like where where are you seeing like the most innovation

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bubble up lately?

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So we it's I will say it's crossed the boat,

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so we But it happened at different stages.

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So a couple of years back.

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We've seen maybe transformation from a digital standpoint happening at

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the application level, so where clients were looking for like

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digital ways of kind of like going through the process.

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Then econtracting came forward on the indirectly on the direct side.

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Then then new tools came through. We're talking about fraud

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documentation capabilities where clients or dealership will be providing uploading

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the dogs directly to avoid the back and for so

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in other words, technology come in our space in different

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waves at different time.

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But so some of the.

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Inefficiencies that have been existing for years, and it's been

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it's been it's been kind of like actually very very

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high opening to for us to kind of like push

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push the agenda and see how with all the progress

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that we've made as an industry for the last couple

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of years, the last piece more more ready to kind

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of like the collateral you know, you were talking about financing.

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So it's it's very interesting kind of like we've seen

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with the entrance of electric vehicles, we've seen also kind

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of like the model being challenged. So now we're starting

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hearing from like a pure financing of the vehicle. You're

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talking about charging station financing, you're talking about.

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Just subscription model.

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Right now, you're talking about manufacturers coming and thinking through

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how do I separate the financing of the vehicle or

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the financing of the battery. A lot of things how

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happening in about space and it's in constant movement, so

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we're staying on top of fot those trends as well.

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Gotcha. How about from the end consumer standpoint, like when

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you're thinking about you know, customers the bank with associated

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what are the things they're thinking about. Do they appreciate

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like the level of complexity Fabian's talking about, or how

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do they think about, you know, buying a car today

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and coming to a bank for financing or that you

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know through the dealer.

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Are they are they aware.

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Of the changes at this time?

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Yeah? I think most customers aren't. I mean, they read

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what you can find out there in the press, but

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they really don't know the intricacies behind the details that

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we do. And they just they want to show up

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at a car dealership point of sale. They want to

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get there, pick out the car the options they want,

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and leave with it timely and then make their payments

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and move on. They really really don't know kind of

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what Fabing had just framed up right, which is kind

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of I call it the timeline of Originally somebody went

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and applied for a loan, The lender looked at application data,

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and you pull the credit report. Then you had a

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credit report that had a fight Go score on it,

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and you built the custom score, so then you had

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a bankruptcy score that you could use. Then you have

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a fraud score that you could use. Then you have

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artificial intelligence that came in and started to look in

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all kinds of this other data that you could layer

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in on top of those just kind of core scores

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to get to how do you make it? You know,

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how do you make your decision? Then he mentioned collateral

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you get into Okay, we just financed the car. Then

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it was the core four back end, right, tirro and wheel,

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prepaid maintenance gap, and a service contract. Now I can

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sit here, We'll run out of time and list all

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the things you can also add on top of that.

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So it just gets more complex. The more complex it gets,

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the more folks try to analyze it from a regulatory standpoint,

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all the moving parts. It's it's evolved, some of it,

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some of it good, some of it may be a

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little fuzzy.

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But there's a need in the industry when you think

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about this digitalization at different stage, we're realizing that in

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order for the industry to provide better client experience and

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to be more efficient general speaking, there's vire's a need

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to uniform the way we collect data, the way that

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data is transmitted from one provider to another. And that's

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that's most likely why anticipate kind of like maybe the

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next move to be from like going from call it

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the paper to the electronic now trying to to to

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to find a common.

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Way to pass the data.

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So the data that comes from the dealership will will

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will be making our way to us lenders in in

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in a similar fashion, I won't have like, you know,

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ten different ways of like entering a field and creating

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proper issues in the back end. And the same goes

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on from like origination to service into collection.

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And do you think that's a reaction to open banking

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and that rules are more more on the innovation side

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and just trying to.

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More on the innovation side.

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Just simple the cycle of technology going through just again

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it's the messy adoption trying to find efficiency in VAT.

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Once you get the client going through that, now it's

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the entire industry trying to look at the ways to

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kind of like you know, better and more efficient ways

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to kind of like from you.

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So I'll come in just so one of the fraud

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So the fraudsters, they're smart, they're not stupid, right, So

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I'd like to say they're smarter than me, so I

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got to be I'll think in the room with them.

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But yeah, they take the auto automation right, and we

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want to be eighty ninety percent automation right, be efficient,

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et cetera. And sometimes that comes at a cost because

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if you're automating things, you're auto approving things, you're not

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stopping things. So the fraudsters prey on that and use

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that to their advantage. So you you've kind of always

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got away your auto decisioning is an example, but I

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want to dial that back a little bit to catch

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some of this fraud. But then again, if you're slowing

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down good deals to catch the one bad one. So

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it's a definite struggle. We talked about that yesterday as well.

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Is there is there a formula to that or how

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do people think about that? Generally, for every you know,

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ten loans you approve, it's okay to have you know,

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one bad one, Like.

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I don't think as a formula specifically. Obviously, depending on

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your credit risk appetite and the size of your lending organization.

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There's a lot of efficiencies that comes with, you know,

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the automation and the tools that we just mentioned here

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and that creates you know, literally you know, direct effect

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on your bottom line. Now, like Max said, it's a

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it's a ratio, it's a formula. But each financial institution

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will have to solve for themselves. You know, due to

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your size, you might be okay letting one or two

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bad loans coming through. If you're a little smaller at

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one or two bad loans, you want to catch earlier.

301
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And so so again, it's just like it's your risk.

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Appetites is the way you generate. It will be very

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different from one institution to another.

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Yeah, and I won't Yeah, I'll give you one example,

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so perfect example. Economies of scale in size. We talked

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about this yesterday. So if you apply for a loan,

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we auto approve you, so everybody auto approves you. If

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you go across the street you're shopping, some places will

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not auto prove you. You'll dupe. It's a duplicate app

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We look at, okay, is this customer trying to bust

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out why they're trying to finance two cars? Well he's

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just looking at this camera here and a camera cos yeah,

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we'll buy him. We manually approve them. A lot of

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folks will just automatically reapprove you again and again and again.

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They won't stop that process. So what could happen? You

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accept the risk you could finance ten cars eight cars

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bust out, and that happens. You can finance eight cars

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for you and you're going to put them all on

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Turo and lease them out. So the economy of scale

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that we would lose by not doing that is we

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have to manually stop and say, okay, here's eighty deals

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where the customer was trading in the car. They're legit,

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but look at the ones we caught through a little fuzzy.

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The other side is a lender may say it's acceptable risk.

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We're not going to stop that automation for the couple

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that we might get burned on. So it's a it's

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a trade off as long as you understand that, yeah,

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I think that's that's probably the most important thing, and

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then you just solve for it and say do it

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this way or do it the other way?

331
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Is it?

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Is it more of that type of fraud or what

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are people more worried about? You know, especially with some

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of the AI tools, you think about deep fake and

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like how do you automate or even if you wanted

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to phone call somebody or you know, try to even

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manually intervene in a limited way. Are fraudsters more advanced

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in some of those or is it just a lot

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of you know, more first first party fraud.

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First party fraud, I think is what we're seeing the

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most again just for for your audience. Those those are

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you know, effect social security numbers behind a real person

343
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and and and that that individual is used to kind

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of like you know, go through application of of loans,

345
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and that's what we're seeing. But to your comment, I

346
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think this is the most important. Is that is getting

347
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more and more sophisticated, requiring every one of you know,

348
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the members at CBA to pay and keep.

349
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On investing invet space.

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So this is where we rely on tools, best practices,

351
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share off information as well, try to combat troat. It's

352
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becoming faster to your point with the if you're totally

353
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aering AI on top of this, yes, it can be

354
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created very fast.

355
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Yeah. And is it only something that can really be

356
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prevented by every lender, every dealer, like at each point

357
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of entry or is there any centralized way to stop

358
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some of this that everyone can benefit from.

359
00:17:31.400 --> 00:17:34.000
So you can do a consortium and there's there's third parties.

360
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I won't name them right, there's several that they do

361
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a consortium that as soon as I catch fraud, I

362
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reported the consortium so that if somebody gets an app

363
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the next second, they'll know, so you can go to

364
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the consortium route third party providers. But what unfortunately, or

365
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I guess fortunately for us, Unfortunately for dealers dealers, by

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virtue of our dealer agreement, if we catch fraud on

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the back end, it's unfortunate. But they kind of a check.

368
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They have tricks and devices through their insurance company. But

369
00:18:02.519 --> 00:18:05.680
really they're really the ones that that identity fraud, the

370
00:18:05.720 --> 00:18:10.119
fake ID, the fake driver's license, the meal somebody hired

371
00:18:10.160 --> 00:18:12.640
somebody to come in. I'm right here in Florida has

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I think it's the biggest one so far. Over three

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hundred cars through that fraud ring. And of course they

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were all delivered through dealers. All the dealers are technically

375
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on the hook, but you know, so they're partners of ours.

376
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We try to catch stuff to at our end, but

377
00:18:28.039 --> 00:18:30.559
ultimately they're as far as red flag rules, you're familiar

378
00:18:30.599 --> 00:18:32.839
with those, you know, they're bounded by those, just like

379
00:18:32.839 --> 00:18:33.400
a bank is.

380
00:18:34.599 --> 00:18:36.759
Well, maybe enough on the scary topics like what are

381
00:18:36.799 --> 00:18:38.519
the things you guys are excited about in this space,

382
00:18:38.599 --> 00:18:42.200
like what are the things you see innovation again that

383
00:18:42.279 --> 00:18:47.039
maybe benefits consumers, dealers, lenders that are coming up.

384
00:18:47.200 --> 00:18:49.920
Yeah, I mean one of the best, the biggest challenges

385
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