Thursday, June 03, 2010
Thousands of car buyers at risk of committing finance fraud
By providing false information in a finance application or selling a car which has outstanding finance, customers may not realise they are committing a serious crime. This was the warning from the Finance and Leasing Association (FLA), which published new figures today showing nearly 2,500 fraudulent motor finance applications in the first three months of 2010.
The FLA statistics also reveal that in the 12 months to March, there were almost 10,000 attempted fraudulent applications to motor finance providers, with a total value of £126.8 million. Rigorous checks by finance companies kept the number of actual cases of fraud down to 960, worth a total £15.8 million.
While there has been a slight decline (3%) in fraud in the first three months of this year compared with the same period 12 months ago, the figures show that a large proportion of fraud cases may be committed unwittingly by car buyers. Almost a third of motor finance fraud (30.8%) in the past year was application fraud where a customer - sometimes unintentionally - gives incomplete or inaccurate information to a lender.
Almost as prevalent (29% of motor fraud) was the fraudulent sale of a vehicle which does not belong to the seller - known as conversion fraud. For most car finance arrangements, ownership of the car does not pass to the customer until the end of the agreement, so customers are committing fraud if they sell their car with outstanding finance. First party fraud was also significant, accounting for 27.7% of fraud cases in the 12 months to March 2010. This is where a customer makes their loan repayments using, for example, a false credit card. The 'customer' may also be illegally leasing the vehicle to another person, through a bogus car rental business, for example.
Paul Harrison, Head of Motor Finance at the FLA said:
"In just the first three months of this year there were almost 2,500 fraudulent loan applications to motor finance providers. Finance companies continue to work closely with police to combat finance crime, but it is vital that consumers are made aware of how fraud could affect them.
"Car Crime Awareness Week is an opportunity for us to raise the profile of this type of crime, and remind people that they have legal responsibilities when taking out motor finance. If they fail to disclose their credit history during the application process or try to sell a vehicle that is still on finance, they are committing fraud against their lender and may have their car taken from them."
DATED: 03.06.10
FEED: GG