Report reveals rise in fraud especially in mortgage, credit cards, and auto finance
Canadians who are desperate to get on the housing ladder, buy a car, or secure a new credit card may be committing serious fraud in the belief that it’s only a minor tweaking of their financial status.
Equifax Canada says that its research suggests an uptick in fraud cases may be at least partly driven by financial pressures faced by consumers, although there are also some new tactics being used by fraudsters.
The rise in fraud cases is most prevalent in credit card, auto loan, and mortgage applications with year-over-year increases in fraudulent applications of 38%, 28%, and 19% respectively. For mortgages, first-party fraud cases have risen to 54% of all fraud types, from 47% last year.
“With respect to mortgages, some homebuyers hoping to enter a pricey real estate market are willing to fudge their salary numbers on an application," said Carl Davies, Head of Fraud and Identity, Equifax Canada. “This isn’t just a ‘little white lie’— it’s fraud. It’s a serious crime. If interest rates remain high, this trend could easily accelerate in the months ahead.”
Sophisticated fraudsters
Fraudsters try to remain a step ahead of consumers by adopting increasingly bold and sophisticated tactics.
One trend is the use of a blend of real and fake information including ‘synthetic identities’ in credit card applications. Almost 70% of fraudulent applications involve identity fraud.
“Credit card fraud is a pervasive and evolving challenge in the financial sector,” said Davies. “With the increase in fraudulent applications and the dominance of identity fraud, it's imperative for consumers to remain vigilant in monitoring their credit card statements. Financial institutions must also ensure that both their fraud detection strategy and technology is up to date to stay ahead of the ever-bold fraudsters."
Fake identities are also being use more brazenly to obtain vehicles at Canadian motor dealerships.
“Auto theft rings are now more cunning than ever in their use of very convincing fake IDs,” said Davies. “Auto dealers and their sales staff face a range of tactics from fraudsters. Dealerships need to enhance their verification processes and equip their staff with the tools to effectively detect and prevent increasing identity fraud.”
