4:20 am, June 14, 2011
Motor finance fraud cases rose by 17 per cent in the first three months of 2011 according to the FLA.
The figures from the Finance & Leasing Association (FLA) have been released to coincide with the start of Car Crime Awareness Week.
While applications for credit made using false information remain a problem for lenders, the rise in fraud was mostly due to the increase in ‘first party fraud’.
This type of fraud involves people taking out car agreements on behalf of other drivers, as well as customers ‘sub-hiring’ financed vehicles, which accounted for 45 per cent of fraudulent activity in the first three months of 2011.
Sub-hiring is where a person takes out credit to get a car in order that they can then profit from hiring out the car to other drivers who are often complete strangers.
This is illegal because the finance company remains the legal owner of the car until the finance is paid off and has only approved the customer who applied for credit to drive it.
The value of motor fraud cases overall in the first three months of 2011 was £3.8m, up 13.8 per cent on last year’s value. There were 230 cases of motor fraud in the first quarter, and 865 in the last 12 months.
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FLA member finance companies prevented over 2,000 cases of attempted fraud in the first quarter of 2011. This prevented at least £26m of fraudulent deals, which keeps finance costs down for car buyers and helps to make the roads safer by tackling illegal motoring and organised crime that uses sub-hiring as a funding stream for other offences.
The vehicle recovery rate in the first three months stood at 46 per cent.
Paul Harrison, the FLA’s head of motor finance, said: ‘Sub-hiring is not a new phenomenon, but is a problem that has grown in recent months. It’s important that when you apply for a car on finance that advise your dealer if anyone else will be driving it and that during the life of the agreement you remain in possession of the car at all times.
‘As part of this year’s national Car Crime Awareness week, we are again telling car finance customers about their rights and how to protect themselves against being the victim of fraud. A key aim of the campaign is to let organised criminals know that not only are most attempted frauds detected and stopped, of the ones that do get through, many vehicles are recovered and removed, and arrests are made.’
