By providing bogus details in a finance application or selling a vehicle that has outstanding finance, car buyers may not realise they’re committing a serious criminal offence. This was the warning from the Finance and Leasing Association (FLA), which has just released new statistics showing almost 2,500 fraudulent motor finance applications in the 1st 3 months of this year.
The FLA figures also show that in the year to March, there have been nearly 10,000 attempted fraudulent applications to motor finance companies, with a overall value of £126.8 million. Thorough checks by finance companies kept the amount of actual cases of fraud down to 960, worth an overall total £15.8 million.
Whilst there’s been a small drop (3%) in fraud in the first 3 months of 2010 in comparison with the same period a year ago, the numbers show that a significant proportion of fraud cases might be committed unknowingly by car buyers. Almost 1 / 3 of motor finance fraud (30.8%) in the past 12 months was basically application fraud where a buyer – sometimes inadvertently – gives incomplete or erroneous details to a loan provider.
Nearly as common (29% of motor fraud) was the fraudulent selling of a car which was not owned by the vendor – referred to as conversion fraud. For almost all car finance agreements, possession of the vehicle doesn’t pass to the customer until the conclusion of that agreement, so buyers are enacting fraud if they sell their vehicle with outstanding finance. First party fraud was also significant, accounting for 27.7% of fraud cases in the year to March 2010. This is where a buyer makes their loan repayments using, for instance, a false credit card. The ‘customer’ may also be |unlawfully leasing the car to a different individual, through a phony car hire business, for instance.
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.”