Less than 10 percent of attempted motor finance frauds succeed
According to the Finance & Leasing Association's statistics, only 8.7% of attempted motor finance frauds succeed. And of those that do succeed, 44% of the cars involved are recovered by lenders.
The FLA statistics reveal that in Q2 2010, there were 2,361 cases of attempted or suspected motor finance fraud. Rigorous checks by dealers and finance companies kept the actual number of cases where the fraud was not spotted down to 224. This figure is also down 5% on cases of actual fraud recorded in the first quarter of last year.
Lenders' investigating agents work with the police to recover cars in fraudulent cases. The FLA has also sponsored the ACPO Vehicle Crime Intelligence Service's vehicle fraud unit since its inception in 2007 to recover cars and prosecute fraudsters. In the past 12 months, more than 300 cars (44% of all fraud cases) have been recovered through a combination of AVCIS, finance company investigators and local police forces.
The FLA also works in partnership with the police on a Vehicle Recovery Scheme (VRS), which allows finance companies to recover cars they own that have been driven illegally by a finance customer and have ultimately been seized by the police. The VRS has led to £4 million worth of illegal vehicles being taken off the UK's roads in 12 months.
Paul Harrison, Head of Motor Finance at the FLA, said: "A third of motor fraud cases involved customers selling their car without settling their finance agreement in full. This is known as conversion fraud and it has become a bigger problem during the recession. In some cases, customers are not aware that they are not the legal owners of their car and do not realise that selling it is fraud. The finance company remains the owner of a car until all outstanding finance has been paid. At this point, a lender will generally transfer legal ownership to the customer and he/she can then do what they want with the car.
"Anyone having trouble making repayments should immediately contact their lender to discuss their situation. Lenders are keen to work with customers to agree alternative payment plans whenever possible."
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Related categories: Car loan and car finance
