Automotive Fraud on the Rise, Equifax Reports
Application fraud may be down in some areas, but automotive lenders are seeing a surge in fraud. According to new data from Equifax Canada, automotive fraud is up by 54 per cent year-over-year and is largely driven by falsified credit applications and the continued prevalence in identity theft.
In Ontario, which has it worse than any other province in Canada, auto fraud rates have doubled since the summer of last year.
- Also: Auto Theft Down 17 Percent Across Canada So Far in 2024
- Also: Canada Now Has a National Action Plan on Combatting Auto Theft
The most prevalent type of misrepresentation in automotive first-party fraud continues to be cases where the borrower knowingly uses their own personal information to commit fraud.
"Automotive fraud is a significant pain point for both businesses and consumers," says Carl Davies, Head of Fraud and Identity at Equifax Canada. “Consumers choosing to falsify their income, employment, and financial information to secure credit are a growing concern for lenders. This deceit may provide short-term financial gains for the consumer, but certainly can lead to long-term consequences such as loan denials, damaged credit, and legal ramifications.”
Identity Theft Increasingly Becoming a Problem
In related news, Equifax Canada is reporting that the proportion of identity theft in credit applications continues to grow with 48.3 percent of all fraud applications now flagged as identity fraud, up from 42.9 percent at the same time a year ago.
While the proportion of true identity fraud remains the same at 39.4 percent, there has been a rise in synthetic identity fraud, where criminals combine real and fake data to create new identities, from 2.8 percent to 8 percent.
"The rise in true identity fraud along with synthetic identity fraud, underscores the need for enhanced fraud detection across digital platforms where these crimes are increasingly being perpetrated,” Davies notes. “The increase in digital transactions has made it easier for fraudsters to exploit weaknesses in current fraud prevention measures."
A Good Credit Score is No Safeguard
Equifax Canada has also found that older consumers with high credit scores are increasingly being targeted. Some 40 percent of third-party identity fraud cases in 2024 involve victims with credit scores above 800 (which is considered excellent), and 76 percent of these consumers have no prior delinquency on their credit files.