The level of fraudulent motor finance
applications detected in 2008 grew by 70 percent year-on-year,
In addition, the level of fraud undetected at time
of application grew by 12 percent, the data company said.
Nick Mothershaw, director of Fraud and Identity
Solutions at Experian, said the growth in motor finance fraud was
driven by the recession
“The deeper this recession gets, the greater the
threat of fraud becomes,” Mothershaw added.
Motor finance fraud is becoming more attractive to
organised criminals, he added, thanks to the high-value assets
available to criminals, and the relative ease with which cars can
be sold for a quick cash return.
“We are encouraging our clients to look for
evidence of fraud rings in their data – for example, the same
mobile phone number used on a variety of fraudulent applications,
or multiple attempts at securing finance for the same kind of
vehicle on a fraudulent basis,” Mothershaw said.
He also identified “first-party fraud” – fraud
committed by individual customers – as a growing worry.
“We are seeing more people lying on credit
applications” he said. “For example, not listing a previous address
which is associated with their personal poor credit history, in an
attempt to fool underwriters.”
Mothershaw observed that the incidence of
first-party fraud was exacerbated by the dearth of availability in
subprime motor finance.
“As subprime customers come to the end of their
finance term, they may be unable to afford to make the balloon
payment to keep the car, while the original lender may well have
ceased new business, meaning they are unable to take out a new
agreement,” he pointed out.
“Subprime customers are trapped, and displaced to a
more prime market, where stricter underwriting standards means they
are unlikely to be accepted,” Mothershaw said.
“In that situation, the temptation to withhold
damaging information and to manipulate personal data in order to
qualify for finance becomes much greater, and the incidence of
fraud therefore rises.”