AI Fraud Detection Firm Secures $63M as Lending Losses Surge Across Financial Sector
A fintech company specializing in artificial intelligence-powered fraud detection has secured $63 million in growth equity funding as financial institutions grapple with mounting losses from lending fraud. Informed.IQ, whose technology verifies loan applications and detects fraudulent activity, serves seven of the top ten U.S. auto lenders and has processed more than $350 billion in loan originations, according to company statements. The investment from Invictus Growth Partners comes amid a 145% surge in consumer non-mortgage write-offs since 2021, with Equifax data indicating auto lending fraud losses now exceed $7.9 billion annually.
Background and Context
The rapid acceleration of lending fraud presents a growing challenge for financial institutions, particularly as generative AI tools enable more sophisticated application forgery. Consumer lending write-offs reaching 145% above 2021 levels reflect systemic vulnerabilities in traditional verification processes. The market for AI-powered verification services is approaching $6 billion, driven by lenders seeking technological solutions to stem mounting losses. Financial institutions increasingly rely on automated systems to process loan applications, creating both efficiency opportunities and potential security gaps that fraudsters exploit.
Key Figures and Entities
Informed.IQ's leadership includes CEO and Co-Founder Justin Wickett, who positions the company's dataset as a key competitive advantage. The firm's investor group now includes Invictus Growth Partners, with Managing Partners John DeLoche and William Nettles joining existing backers Nyca Partners and US Venture Partners. Among Informed.IQ's clients is Westlake Financial Services, whose President Ian Anderson publicly credits the technology with preventing "double-digit millions" in annual fraud losses. The company's platform leverages data from over 100 million loan documents and two billion lending data points across major financial institutions.
Legal and Financial Mechanisms
The AI verification system incorporates historical loan performance data to train fraud detection models, enabling what investors describe as "forensic precision" in identifying suspicious applications. The technology addresses multiple stages of the lending lifecycle, from pre-underwriting through servicing, using integrated AI models to enable "straight-through processing" for qualified loans while flagging potential fraud. This approach represents a shift from manual verification processes toward automated systems capable of analyzing application patterns across institutions in real-time.
International Implications and Policy Response
The rise of AI-powered fraud detection tools reflects broader technological arms race between financial institutions and sophisticated criminal networks. As lending platforms expand internationally, regulatory frameworks struggle to keep pace with evolving fraud methodologies. The application of AI in government benefit administration and tenant screening—markets Informed.IQ plans to enter—raises questions about algorithmic transparency and potential bias in automated decision-making systems. Financial regulators worldwide are increasingly focused on oversight of AI applications in lending, particularly regarding fair lending compliance and consumer protection.
Sources
This report draws on corporate announcements regarding the $63 million investment, Equifax market data on lending losses, and public statements from Informed.IQ executives, investors, and clients. Information about market sizing and industry trends is based on company disclosures and financial industry reporting between 2021-2024.
