Increase In UK Financial Services Fraud, Including Car Finance


The financial crisis and economic recession have caused a jump in the number of people lying on application forms to borrow money. Large credit reference firm Experian reported that 56 percent of the fraud against financial services organizations in 2010 involved people providing misleading or false information in an attempt to qualify for products they normally would not.

This is an increase from 39 percent during 2009.

Experian attributed the increase to people facing unemployment or decreased take-home wages. These situations made it more difficult for individuals to qualify for credit. Tighter bank lending criteria due to the credit crisis is also thought to be a factor.

According to Experian, single people young in age and with limited incomes were most likely to commit this fraud.

Loans and credit cards were the two products most commonly targeted. However, the level of car finance and mortgage fraud also surged during the past year. Of every 10,000 car finance applications, 38 were fraudulent.

Over 80 percent of these involved an applicant lying about his or her circumstances, often by attempting to cover up a poor credit history.

In 2010, attempted mortgage fraud increased 14 percent. Fraud was discovered on 32 of each 10,000 applications. Inflation of the financial situation or employment prospects and failure to disclose

previous addresses were the most common actions.

Experian reported an 11 percent total increase in fraud last year. In 2009, 18 of every 10,000 applications were fraudulent, increasing to 20 of every 10,000 in 2010.

Fraudulent applications involving current accounts experienced a 25 percent increase. Nearly half of these involved identity thieves attempting to open accounts in the name of another person. Experian Director of Identity and Fraud Nick Mothershaw reported that fraud within the UK now represents a billion-pound business.

Fraudsters use innovative methods to exploit weaknesses within the system.