Insurance and Loan Fraud Rising as Credit Crunch Bites

A recent report indicates that fraudulent loan applications have increased by more than 4 per cent as a result of the credit crunch. Now, an average of nearly 1 in 500 applications for car finance, credit cards, insurance, loans and mortgages is fraudulent. The highest level of fraudulent applications is for car finance, with 2.5 per cent of loans representing a detected fraud. However, the Government’s ‘scrappage scheme’ has brought large numbers of genuine loan applicants into the market, so the proportion of fraudulent loans in car finance is still low by historical standards.

Mortgage fraud (in which the frauds typically involve large sums) is continuing at a high level with 0.25 per cent of mortgage applications being fraudulent. This is down from 0.3 per cent, but still represents a 50 per cent increase on the pre-credit crunch average. Levels of fraud for credit cards are similar, with fraud found in 25 out of every 10,000 applications.