While FLA statistics showed actual cases of
motor finance fraud down 14% over the course of 2010, a separate
report by global information company Experian has shown the
incidence of fraudulent applications up 31% in the sector, to a
level of 38 out of every 10,000.
Attempted frauds across the UK financial
services sector as a whole increased by 11% in 2010, with 20
fraudulent applications per 10,000 compared to 18 in 2009.
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The increase in attempted motor finance fraud
was higher than for any other type of finance, although it is
likely that the increase in the number of genuine applications
brought about by 2009’s scrappage scheme inflated the year-on-year
change in Experian’s fraud index.
James Taylor of Experian commented that while
80 to 90% of attempted fraud seen by car lenders was first party
fraud in which applicants failed to disclose poor credit history or
true employment details, the remainder was third party fraud
involving attempts by criminal gangs to obtain cars for sale.
“While third party fraud is less common in the
car finance industry,” he commented, “it represents a greater risk
because the chances of recovering fraudulently acquired vehicles
are much slimmer.”
The statistics used to compile the report
represent applications processed by businesses using Experian’s
National Hunter information sharing system, which the company says
is used by “the majority of” – but not all – UK car lenders.
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By GlobalDataTaylor commented: “There is a very real
recognition among car finance providers that the increasing number
of fraudulent applications is a problem, and they are catching up
with the banks in terms of the safeguards they have in place to
prevent frauds taking place.”
