First-party fraud was the most common type of motor finance fraud in the second quarter of 2012; now representing 37% of car finance frauds, up from 34% in Q2 2011, according to the Finance and Leasing Association (FLA).
This kind of fraud usually takes the form of fronting whereby a person takes out credit on someone elses behalf, meaning the vehicle is not used by the customer originally approved by the finance provider.
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Application fraud was the second most common type of misdemeanour, representing 30% of all fraud cases, followed by conversion fraud (when a car is sold whilst still on finance) at 25% and the remaining 8% being made up of identification and impersonation frauds.
In general, motor finance fraud fell by 6% in Q2 2012 year-on-year with FLA member finance companies and their dealer partners preventing at least 1,760 cases of attempted fraud at the application stage, continuing the trend of falling fraud and good business practice highlighted by the FLA in early July.
However, Paul Harrison, head of motor finance at the FLA, emphasised the need for vigilance, saying: Its important that finance companies know who is driving their property for the duration of an agreement.
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By GlobalData
