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More fraudsters caught as lending rises again
publication date: Dec 17, 2009
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author/source: Robin Roberts
| Almost 40pc of motor finance fraud cases in Q3 2009 were
committed by people selling cars which they did not own, according to
new figures released today by the Finance and Leasing Association. | Around 25pc of motor fraud involved applicants giving false information on their finance application form.
As a consequence of the recession, finance companies have reported an
increase in the number of people selling cars before settling their
outstanding finance - known as ‘conversion' fraud. Under a hire
purchase or personal contract purchase agreement a customer does not
own the car outright until all repayments have been made and an ‘Option
to Purchase' fee has been paid. Customers with lease agreements do not
have the option to buy the car outright and so must return the car to
the finance company.
Fraudulent deals cost the industry £3.4 million in the
third quarter of this year. But the efforts of motor finance companies
to combat fraud meant that the number of fraud cases fell by 29pc
compared with the same period in 2008. The figures show that at least
2,700 cases of attempted motor finance fraud were prevented in Q3 2009
alone.
If these applications had not been detected, fraudsters would have
stolen £35 million from motor finance providers. Industry action is
helping to stop criminals, make the roads safer and save honest
customers money.
So far in 2009, motor lenders have prevented at least 8,500 fraudulent deals worth £100 million.
According to FLA figures, London remains the nation's motor finance fraud ‘hotspot', followed by Glasgow and Manchester.
Paul Harrison, Head of Motor Finance at the FLA, said, "‘Conversion'
fraud is on the increase as some customers try to escape their
financial commitments and profit from the sale of a car that does not
belong to them. It is sometimes the case that a customer genuinely
believes all the finance has been settled when it hasn't.
| | The latest motor finance statistics from the Finance
& Leasing Association (FLA) show strong demand from consumers for
new car finance, but motor finance providers remain cautious about the
prospects for 2010 as the UK slowly recovers from recession.
In October the number of new cars bought by consumers
using forecourt finance was up 18pc, compared with the same time last
year. Demand for new car finance was particularly weak during the final
months of 2008, and car buyers are this year taking advantage of the
reduced VAT rate as well as the attractive finance options available in
dealerships. The FLA expects new car finance to perform well in the
last two months of the year ahead of the return to a higher VAT rate in
January.
The consumer used car finance market continues to contract, falling
14pc by volume in October compared with the same month a year ago.
Overall, in the 12 months to October new and used car finance volumes
fell 21pc and 13pc respectively, compared with the same period in 2008.
Commenting on October's motor finance figures, Paul Harrison, Head of Motor Finance, said, "While recent growth in new car finance is welcome, the withdrawal of
Government incentives in 2010 - in particular, the 15pc VAT rate - will
affect demand. The end of the scrappage scheme may also mean a return
to more traditional buying behaviour in the new and used car markets.
Wholesale finance remains expensive and we shall be closely monitoring
how this impacts on the motor finance market in 2010. We hope to see
positive results from the Government's efforts to improve the wholesale
market." | | “Whether fraudulent or mistaken, this kind of car sale
can cause distress for the third party buyer. I would urge anyone
interested in buying a used car to run a car background check to ensure
it is free of finance before purchasing it. Anyone having trouble
making payments on their car, or on any other loan, should immediately
discuss the matter with their lender.
"Finance companies have been especially vigilant during the recession
so as to stamp out fraud, whether opportunist or organised. Fraud is
not a victimless crime. Our work with the police is also helping to
prosecute organised gangs who use stolen cars to finance drugs and
firearms trafficking." | | | |
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