While fraud in the third
quarter of last year was 17.7% down year on year, an escalation in
‘fronting’ has been behind an increasing amount of first-party
fraud, financial crime experts have warned.
Fronting arises when a person
applying for motor finance has a good credit record, but the car
acquired is then used by a driver with poor credit or who cannot
get insurance.
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Fronting is often linked to
organised crime, with gangs using stolen identities to deceive
motor lenders into approving finance agreements for cars driven by
members.
Detective inspector Andy
Mackay from the Vehicle Fraud Unit at the ACPO Vehicle Crime
Intelligence Service said: “Sometimes vulnerable or gullible people
are used to perpetrate this crime.
“In a recent case, a student
was persuaded to take out finance on two BMW X6s by criminals who
promised him payment and use of the cars if he fronted the
deal.
“Of course, the fraudsters
only paid the repayments into his bank account for a short while,
and when they stopped paying he was left high and dry.
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By GlobalData“The student involved is
legally liable for the finance agreement and is currently awaiting
trial for fraud, while the criminals have basically laundered the
money.”
DI Mackay also warned that
many ordinary families risk falling foul of the law by fronting for
younger family members.
“We know that in some cases
parents will claim a car is for their own use when it’s actually
going to be used by one of their children who can’t get finance,”
he said.
“Technically, this is wrong,
and finance companies are not happy about it. However, they do tend
to tolerate it because the vehicle use is within the family and is
probably under the control of the parents – and often parked in
their driveway.
“So, though it’s an offence
under the letter of the law, when looked at with proportionality,
the vehicle is not being used for criminal activities.”
The overall value of motor
fraud in the third quarter of 2010 was £3.1m, down 17.7% on the
same period in 2009.
In the 12 months to September 2010, FLA members prevented
more than 10,000 cases of suspected or attempted fraud and saved at
least £125m.
