A new report from Equifax Canada points to a rise in automotive fraud driven largely by identity theft and falsified credit applications.
The company said in a news release that application fraud is down in some areas, but that auto lenders are seeing a surge in fraud. Equifax Canada’s latest data shows that fraud is up by 54 per cent year-over-year, with Ontario experiencing the most significant increase. (Rates have doubled since the second quarter of 2023.)
“Automotive fraud is a significant pain point for both businesses and consumers,” said Carl Davies, Head of Fraud and Identity at Equifax Canada, in a statement. “Consumers choosing to falsify their income, employment, and financial information to secure credit are a growing concern for lenders.”
He said this deceit may offer short-term financial gains for the consumer, but that it can lead to long-term consequences “such as loan denials, damaged credit, and legal ramifications.” Adding to this, Equifax Canada said first party fraud remains the most common type of misrepresentation in automotive.
Overall, the percentage of fraud applications flagged as identity fraud in the second quarter of the year reached 48.3 per cent — up from 42.9 per cent in the second quarter of 2023. In comparison, true identity fraud remained the same at 39.4 per cent.
Equifax Canada is seeing a rise in synthetic identity fraud, in which criminals combine real and fake data to create new identities. Synthetic identity fraud incidents jumped from 2.8 per cent in the second quarter of 2023 to reach 8 per cent in the second quarter of 2024.
“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,” said Davies. “The increase in digital transactions has made it easier for fraudsters to exploit weaknesses in current fraud prevention measures.”
