Almost 30% of motor finance fraud in the past
12 months was committed using false finance applications, according
to a Finance & Leasing Association (FLA) report published
today.

Fraudsters giving false information on their
car finance applications are most likely to lie about their
employment, often citing bogus companies as their employer. They
also use false home addresses and overstate their earnings to
increase their chances of getting credit.

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Motor finance companies have become adept at
spotting fraud and only one in every 11 fraudulent applications is
successful. As a result, there were fewer than 250 cases of
undetected application fraud in the past 12 months.

Motor fraud of all types cost lenders £2.9m in
the second quarter of 2011, down 0.8% on Q2 2010. There were 195
cases of motor fraud in the second quarter, and 835 in the past 12
months, a fall of 12% on the previous 12 months.

Working in tandem with the police’s Vehicle
Fraud Unit, FLA member finance companies detected more than 2,100
instances of motor fraud in the second quarter of 2011, preventing
£26.8m of fraudulent deals.

FLA head of motor finance Paul Harrison said:
“Application fraud increases in tough economic conditions, as
people know that it can be difficult to get finance if they have a
poor credit history or an unsteady source of income. But
exaggerating their income, hiding previous addresses or giving
false employment details to improve their chances of getting a car
on finance is fraud and will be reported to the
police.  

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“We have just entered our fifth year of
sponsoring the Vehicle Fraud Unit of the ACPO* Vehicle Crime
Intelligence Service and have recruited additional police officers
to help send a clear message that fraudsters will be
prosecuted.”

*Association of Chief Police Officers