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Net tightening on finance fraud

Just 8.7% of attempted motor finance frauds succeed and of those that do succeed, 44% of the cars involved are recovered by lenders, according to the Finance and Leasing Association.

Its statistics reveal that in Q2 2010, there were 2,361 cases of attempted or suspected motor finance fraud.

Checks by dealers and finance companies kept the actual number of cases where the fraud was not spotted down to 224.

This figure is also down 5% on cases of actual fraud recorded in the first quarter of last year.

Paul Harrison, head of motor finance at the FLA, said: “A third of motor fraud cases involved customers selling their car without settling their finance agreement in full.

"This is known as conversion fraud and it has become a bigger problem during the recession.

"In some cases, customers are not aware that they are not the legal owners of their car and do not realise that selling it is fraud.

"The finance company remains the owner of a car until all outstanding finance has been paid. At this point, a lender will generally transfer legal ownership to the customer and he/she can then do what they want with the car."

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