The crime of fronting is on the rise, according to the latest figures from the Finance & Leasing Association (FLA).
They say that the practice which involves someone with a good credit record applying for motor finance, although the car is used by a driver who has a poor credit record or cannot get insurance is often an organised crime. Criminals use a stolen identity to fool lenders into approving a finance agreement for a car that is driven by someone else.
Companies assess the risk of providing finance to a driver based on their credit record as well as their driving record. A driver who has previously committed a motoring offence or cannot get insurance poses a risk to lenders and may be turned down.
However, despite the rise in fronted crime, the value of all motor fraud cases in the third quarter of 2010 was 3.1 million, down by 17.7% on the same period last year. There were 188 cases of motor fraud in the third quarter, a drop of almost 24% on the same period in 2009.
In the 12 months to September 2010, FLA members prevented over 10,000 cases of suspected or attempted fraud and saved at least 125 million. At the same time, the number of recovered cars linked to fraud cases was the highest in three years.
Paul Harrison, the FLAs head of motor finance, said: Motor finance companies are winning the fight against fraud through closer co-operation and partnerships with the police. Criminals are always finding new ways to beat the system, though. Fronted finance agreements are on the rise, but lenders are determined to protect innocent motorists by developing new procedures to clamp down on offenders.