Equifax Canada Reports 54% Increase in Auto Fraud Due to ID Theft and False Credit Applications

Automotive fraud has increased by 54 percent compared to last year due to fake credit applications and identity theft, as reported by Equifax Canada.

“There seems to be a deliberate targeted attack on that sector,” said Carl Davies, the head of fraud and identity at Equifax Canada in an interview.

The province with the largest increase in auto fraud rates was Ontario, where they have doubled since the previous year according to the report released on Tuesday.

Davies mentioned that the rise in vehicle prices in recent years has made the industry a prime target for fraudsters, and the options to combat criminals are limited.

According to Davies, not all fraudsters are part of organized criminal groups.

The most common type of auto fraud is first-party fraud, where individuals provide false financial information, such as inflating their income.

Davies stated that about 60 percent of auto sector fraud is related to consumers misrepresenting their financial status, which is a concern for lenders.

He also mentioned that the high cost of living in Canada has put pressure on household budgets, potentially leading to an increase in fraud rates.

Youth are more inclined towards first-party fraud as they may not realize the long-term consequences of providing false information, according to Davies.

Davies predicts that first-party fraud will continue as people struggle with economic challenges and high unemployment rates.

The report highlighted a growth in identity theft in credit applications, with 48.3 percent of fraudulent applications in the second quarter being flagged as identity theft, up from 42.9 percent the previous year.

Davies mentioned that while lenders are impacted by fraud, ultimately, it affects everyone by leading to increased costs.

Equifax advised businesses and consumers to remain cautious and vigilant. Businesses are encouraged to utilize identity theft protection tools to detect fraud early by verifying identities and staying informed about regional fraud trends.

“If something seems too good to be true, trust your instincts,” Davies warned.