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'More first-party fraud'

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Time 7:46 am, September 4, 2012

‘FIRST-PARTY fraud’, including ‘fronting’, was the most common type of motor finance fraud in the second quarter of 2012, says the FLA.

First-party fraud – which usually occurs when a person takes out credit on behalf of someone else and a finance agreement is ‘fronted’ when a vehicle is not being used by the customer who was originally approved by the finance company – accounted for 37 per cent of all car finance frauds reported to the FLA in the quarter two 2012.

Application fraud accounted for 30 per cent of all fraud cases in the same period, and conversion fraud (when a car is sold when it is still on finance) accounted for 25 per cent of cases. The remaining eight per cent of fraud cases were identification or impersonation frauds.


Overall, motor finance fraud cases overall fell by six per cent in quarter two 2012 compared with the same quarter in 2011. There were a total of 184 cases of motor finance fraud in quarter two 2012, and 743 cases were reported by motor finance companies over the previous 12 months.

In quarter two 2012, FLA member finance companies and their dealer partners prevented at least 1,760 cases of attempted fraud at the application stage. This helped to avoid losses of more than £23.8m from potentially fraudulent deals, which helped to keep the cost of credit down for car buyers.

Paul Harrison, the FLA’s head of motor finance, said: ‘It’s important that finance companies know who is driving their property for the duration of an agreement. This does not mean that a parent can’t apply for credit to buy a car for their children, because the location of car will be known.


‘Lenders are more concerned about customers handing cars to third parties who cannot be traced. A finance company will usually remain the owner of car until the final repayment is made and any breach of contract could result in a case being referred to the police’s national Vehicle Fraud Unit for investigation.’

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.



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