Auto fraud is up 54% in Canada — and culprits may not be who you think

Auto fraud is on the rise in Canada — but the culprits might not be who you think.
A new report released by Equifax Canada showed automotive fraud was up by 54 per cent year over year, and the credit bureau said it is largely driven by the continued prevalence of identity theft and falsified credit applications.
Carl Davies, head of fraud, identity and compliance at Equifax, told Global News that first-party fraud, where the borrower may use their own credentials but change something like employment income, is the most common type of misrepresentation — something he adds is illegal.
He said costs like rent, mortgages, interest rates, upcoming mortgage renewals and a tough job market all contribute.
“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 said.
He added that while dealerships typically do a credit check before giving out a car, Equifax has still seen first-party fraud “across the board” from both top lenders and below prime-type businesses.
When asked what percentage this would amount to, Davies said approximately 60 to 65 per cent of auto fraud is first-party, while the other 35 to 40 per cent is third-party — where a “bad actor” steals someone’s identity or takes over accounts in order to obtain a vehicle — or organized crime.
Davies said auto fraud has become appealing to criminals, especially as he said there’s little recourse because it can be difficult to identify the perpetrator and bring prosecution.
“The high value of assets when we think about automotive fraud is very attractive to criminals. Relatively liquid asset compared to some other items, they can resell out pretty quickly, ship it overseas, which I know is a big issue that we see today,” he said.
With the amount of technology easily available, Davies said it’s allowed for identity fraud to occur at a broader level through text message or phishing scams. Equifax said older consumers with high credit scores are increasingly being targeted, in part because they may be “less savvy” in detecting those scams.
But Equifax warns it’s not just regular identity theft that’s occurring and being used for auto fraud.
Synthetic identity fraud increased from 2.8 per cent in the second quarter of 2023 to eight per cent this year. This type of fraud sees a criminal combine real and fake data to create new identities, such as changing a date of birth or first name “just enough for it to make it look like a different individual than the person whose identity that you’ve stolen.”
For Canadians who commit first-party fraud, it may provide short-term gains for the consumer but loan denials, damaged credit and even legal issues could arise in the long run.
Davies says cases of organized crime or third-party auto fraud are similar to auto thefts being seen in Canada with someone using another person’s identity to get a vehicle, which they then drive to a port and have shipped overseas. This not only leaves the person whose identity was stolen with the cost of the vehicle but could also mean increased insurance premiums for many Canadians because more thefts are occurring.
There are things you can do to protect yourself from rising auto fraud, such as not clicking links when you don’t know who they’re from; if suspicious of an email or text from a company or bank, call them directly; and monitor your credit reports so you can detect if someone has applied for an account in your name.