Motor finance fraud costs lenders around £15 million each year and, as we know, is often linked to other criminal activity.
FLA has been working on behalf of the motor finance industry to promote best practice and to take the lead on new fraud-related initiatives. The prevention and investigation of fraud is something that our members and FLA itself take very seriously indeed, and something on which our members have worked collaboratively for some years.
As well as maintaining a number of standing groups of members on fraud-related issues, FLA continues to lead the way in collaborative projects to prevent and investigate motor fraud.
Vehicle Fraud Unit
In 1997, we joined forces with the Merseyside Constabulary to launch what was known as Operation Pimpernel, whose purpose was to investigate finance industry crime in order to recover vehicles and arrest offenders in a cost-efficient manner, and to reduce the occurrence of vehicle fraud. Between 1997 and 2000, Operation Pimpernel, which was funded by a number of finance houses, resulted in a decrease in fraud-related allegations in the Merseyside area. Following the success of this pilot scheme, other Constabularies were approached for participation in another project. The Metropolitan Police Service agreed to participate. As a result, the Vehicle Fraud Unit was launched in September 2001, again funded by FLA members.
Since launch, the unit has recovered vechicles worth over £6 millione. There have been around 250 arrests, with those arrested typically being charged or cautioned with deception matters, often involving impersonation fraud. Investigations have also continued to reveal links between vehicle finance fraud and other serious offences.
Port of Tilbury
FLA’s Motor Finance Division members also provided funding for a dedicated police resource at the Port of Tilbury. This two year project provided an officer with specialist experience of motor fraud to investigate vehicles being exported by that route.
The objective was to recover vehicles obtained by fraud and vehicles about to be exported in breach of finance agreements. This initiative delivered impressive results. In the two years to December 2004, police checked over £270,000-worth of vehicles on finance, many of which were recovered by members.
Ultra Violet Lamps
In a move to reduce fraudulent credit applications, members of FLA agreed that, from 1 September 2003, no applications for dealer-introduced motor finance would be accepted unless the dealer checked the applicant’s identity. Specifically this means there must be mandatory production of a full driving licence or a photocard driving licence, or a provisional driving licence with photocard, in every case bearing the customer’s current address. Where the driving licence does not bear the customer’s current address, additional proof of current permanent residence is required. Dealers are required to check the validity of the driving licences.
To help dealers check the validity of the driving licences, FLA and its members provided UV lamps to every dealership in the UK. Photocard driving licences and their paper counterparts have special security features that only show up under ultra violet light.
Members have reported that the use of UV lamps is helping to prevent fraudulent applications.
Collaboration with others
As well as developing anti-fraud policies and projects itself, FLA also works enthusiastically with other organisations, including the Home Office, the Fraud Advisory Panel, other trade associations (BBA, APACS, etc), and Companies House.
Vehicle Safe Trading Advisory Group (VSTAG)
FLA, the Metropolitan Police, Auto Trader, eBay Motors, Exchange And Mart, and Motors.co.uk have joined together to form the Vehicle Safe Trading Advisory Group, to combat vehicle-related fraud. As part of its aim to protect private buyers and sellers of cars, vans and motorcycles from fraud, VSTAG has published a consumer advice guide.
