While auto theft might be making headlines, a new threat is quietly plaguing the Canadian automotive industry: fraud. A recent Equifax Canada report paints a concerning picture, with automotive fraud skyrocketing by 54% year-over-year. This alarming increase is largely attributed to identity theft and deceptive credit applications.

Carl Davies, head of fraud, identity, and compliance at Equifax, explains that first-party fraud, where borrowers misrepresent their financial information, is the most common type. "The potential for that first-party fraud will increase because 'I need a car in order to take my kids to school or to get to work'," Davies points out, highlighting the economic pressures driving this trend.

Disturbingly, synthetic identity fraud – where criminals create entirely new identities using a mix of real and fake data – has seen a dramatic rise from 2.8% in the second quarter of 2023 to a shocking 8% this year.

The high resale value of vehicles and the relative ease of shipping them overseas makes auto fraud an attractive target for criminals. Davies emphasizes the serious nature of these crimes, stating, "This is not just a victimless crime. It’s not just a property crime. This is organized crime that is targeting the vehicle as a commodity to profit from and fund their criminal operations.”

While Ontario has seen the most significant increase in auto fraud, the problem is widespread. The Equifax report notes that nearly half of all fraudulent applications now involve identity theft, emphasizing the urgent need for enhanced fraud detection and prevention measures.

Remember: even seemingly minor misrepresentations on credit applications are illegal and can have serious consequences.  Be vigilant and protect your identity. If you suspect any suspicious activity, contact your financial institution immediately.

The fight against auto fraud is a shared responsibility. Dealerships, lenders, and consumers all have a role to play in ensuring the integrity of the automotive financing process.