Motor finance fraud cases rose 4 per cent in 2008

 The number of reported motor finance fraud cases rose 4 per cent in 2008 as the downturn bit.

The increase came despite a 36 per cent reduction in fraud cases reported in the final quarter of 2008 compared to the same period in 2007.

Overall, the crack down on car finance fraud last year saved the sector £123m.

Members of the Finance and Leasing Association (FLA) reported that 10,500 fraudulent motor finance agreements were caught by screening processes at the application stage in 2008.

Attempts to combat attempted fraud 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. But the number of fraud cases for the year frose 4 per cent.

New FLA statistics show 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 most likely form of fraud was application fraud, accounting for 30 per cent of cases.

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 with a quarter (24 per cent) of cases perpetrated by customers living in Greater London.

FLA director general Stephen Sklaroff said:

“Fraud often increases in a downturn, much is opportunistic.

“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.”