Authored by Ritika Dubey via The Canadian Press,
Driven by fake credit applications and identity theft, automotive fraud has surged 54 percent from a year ago, a report from Equifax Canada has found.
“That kind of increase really indicates there’s a specific targeted attack to that sector,” said Carl Davies, head of fraud and identity at Equifax Canada, in an interview.
The biggest jump in auto fraud rates was in Ontario, where they doubled since last year, said the report released Tuesday.
Rising vehicle prices in recent years have made the industry a target for fraud, Davies said, while in his opinion, recourse against criminals remains limited.
“When you combine those two, I think that’s driven a lot of the fraud activity into the auto sector this time around,” he said.
But not all fraudsters are organized criminal groups, Davies said.
The most common type of fraud was first-party fraud, where people knowingly provide false information about their finances, such as lying about how much money they make.
About 60 percent of fraud within the auto sector was related to consumers misrepresenting their financial situation, Davies said. While that’s roughly comparable with last year, it remains a concern for lenders.
He said the high cost of living, which has pressured many Canadians’ household budgets, could also be underpinning rising fraud rates.
“If they absolutely need the car … I think they will do whatever’s necessary,” Davies said.
First-party fraud was higher among younger Canadians because they think white lies won’t hurt them, he said, but providing false information can lead to serious penalties in the long term such as loan denials, damaged credit and legal ramifications.
Davies thinks first-party fraud will continue to be a trend as people struggle with the economic slump and high unemployment.
The proportion of identity theft in credit applications continued to grow, the report said, with 48.3 percent of all fraudulent applications flagged as identity theft in the second quarter, up from 42.9 percent during the same time last year.
While lenders bear the brunt of fraud, Davies said it affects everyone in the long run.
“The lender, unfortunately, has to recover that cost from somewhere and ultimately what that translates to is higher costs for everybody,” he said.
Equifax called for caution and vigilance among businesses and consumers.
Businesses should use identity theft protection tools to detect fraud early, the report suggested. This includes verifying identities, cross-checking financial documents and staying informed about regional fraud trends.
“If something comes up and it sounds too good to be true, then trust your instincts,” Davies said.
Tyler Durden
Wed, 09/25/2024 – 21:45
