Fraudulent activities within the Canadian auto, credit card, and mortgage sectors have shown a significant rise, as per the latest Equifax (NYSE:EFX) Canada Fraud Trends Report released on Thursday. The report suggests that this surge is driven by financial pressures faced by consumers and innovative schemes implemented by fraudsters.
The automotive sector witnessed a 28% year-over-year increase in fraudulent applications, paralleling the rise in legitimate applications. This trend underscores the audacity of fraudsters who are capitalizing on the pent-up demand for vehicles following supply chain challenges during the COVID-19 pandemic. "Auto theft rings are now more cunning than ever in their use of very convincing fake IDs,” said Carl Davies, Head of Fraud and Identity, Equifax Canada. Identity fraud constituted 16.2% of all fraudulent applications in Q2 2023 in the automotive space.
In the credit card sector, fraudulent applications rose by 37.9%. The creation of synthetic identities, a blend of real and fake information, has become a prevalent method among fraudsters due to its effectiveness in evading detection. This type of identity fraud accounted for 68.5% of all fraudulent credit card applications as demand for credit cards surpassed pre-pandemic levels. “Credit card fraud is a pervasive and evolving challenge in the financial sector,” Davies stated.
The mortgage sector experienced an 18.8% year-over-year rise in the fraud rate. First-party fraud made up 54% of all fraud types observed in Q2 2023, up from 46.5% in Q1 2023. Some homebuyers hoping to enter a pricey real estate market are willing to falsify their salary numbers on an application, contributing to this trend. “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,” Davies warned.
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