Motor finance firms beat back rising tide of attempted fraud

The motor finance industry has successfully reduced the number of motor fraud cases by 35%, despite increased efforts by fraudsters to acquire cars illegally.

Motor lenders prevented £36.5 million of fraud in the first three months of 2009. New figures from the Finance & Leasing Association – the representative body for lenders who provide car finance to consumers – show that only 207 actual fraud cases were reported in Q1 2009 despite the 3,500 cases of attempted/suspected motor finance fraud detected by FLA members over the same period.

Fraudulent deals caused losses of £3.8 million in the first quarter of 2009, but with an increasing number of motorists choosing motor finance to purchase their cars, the industry is taking extra care to beat potential fraudulent applications. Application fraud was the most common type of fraud, accounting for 40 per cent of all cases.

The FLA figures show that the vast majority of fraud occurs in large towns and cities. There is a strong regional split, with 20% of fraud reported in the Greater London area and 10% in the Greater Manchester area.

Motor lenders are being extra vigilant to tackle vehicle mileage ‘clocking’. This is where a vehicle’s mileage is tampered with to improve its value or avoid obligations under a finance agreement .

The FLA has issued guidance to help lenders take action against offenders:

· Look for signs that the vehicle’s general condition matches the number of miles on the odometer – particularly look for wear on the pedals, steering wheel and driver’s seat.

· Analogue odometers may have misaligned digits if they have been tampered with. Digital displays were introduced in part to combat clocking, but these can also be altered, usually with no evidence.

· Check service records and MOT certificates for previous years’ mileages.

· When selling a car, enter the mileage on the registration certificate. This will help to prevent any future clocking.

Commenting on the latest figures, Paul Harrison, Head of Motor Finance at the FLA, said:

“The motor industry is working hard to keep costs down and provide attractive finance deals. Lenders are being particularly vigilant in a recession when there tends to be more opportunistic fraud. Applications are being scrutinised and vehicles are checked for ‘clocking’. In the first three months of the year this has saved over £36 million.”

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Note to editors:

The FLA is the leading trade association for the motor finance sector in the UK. In 2008 FLA members financed £89 billion of new business. FLA members provided £18 billion of motor finance in 2008 and financed more than 50% of all new car registrations in the UK.

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