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Car finance fraud crackdown
publication date: Mar 19, 2009
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author/source: Robin Roberts
A crack down on car finance fraud last year saved industry £123 million. Finance companies' efforts to combat attempted frauds at the application stage resulted in a 36 per cent drop in the number of fraud cases reported in Q4 2008, compared with the same period in 2007. Members of the Finance and Leasing Association - who provide car finance to consumers - reported that 10,500 fraudulent motor finance agreements were caught by screening processes at the application stage in 2008. These agreements, if approved, would have resulted in loans worth £123,423,000 being granted to fraudsters. New statistics released by the FLA show that the reduction in fraud was achieved despite an increasing proportion of car buyers using dealer finance. In the last 12 months, 53.1 per cent of consumers buying a new car used dealer finance, compared with 47 per cent in the previous 12 months. The motor finance fraud figures also show that the most likely form of fraud was application fraud (30 per cent of cases) - where a customer gives false information on their application, such as overstating their income. Other scams including selling cars that are still being paid for on a finance agreement (27 per cent) and using a false identity (25 per cent) were also more prevalent during Q4 of 2008. The data also displayed a strong regional split. 24 per cent of the frauds reported were perpetrated by customers living in the Greater London area, with another 3 per cent in Surrey. Greater Manchester and the West Midlands both had 7 per cent of cases. Commenting on the figures, FLA Director General Stephen Sklaroff said, "Fraud often increases in a downturn. Much is opportunist, and it is a credit to the sophistication of FLA members' background checks and credit scoring systems that fraud cases dropped 36 per cent in the last few months of 2008, and only increased by 4 per cent over the year. "By tackling fraudsters in this way dealers and lenders prevent higher costs being passed on to the rest of us and dealers can continue to provide good deals on the forecourts." DCI Paul Lambotte, Head of the Vehicle Crime Intelligence Service, added, "Motor finance companies' extra effort in spotting finance fraud at the application stage really paid off in 2008. "I am delighted with the strong working relationship we have with the motor finance industry to help prevent fraud and - through the FLA's sponsorship of the AVCIS Vehicle Fraud Unit - to recover vehicles that have been obtained via fraud. The industry and the police are sending fraudsters a clear message." |
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