Equifax Fraud Report Shows Rises in Canadian Credit Card, Mortgage Fraud Rates

New data suggests an increase in fraudulent activities within the automotive, credit card, and mortgage sectors, according to the latest Equifax Canada Fraud Trends Report. The report also suggests the uptick in fraud is being driven by financial pressures faced by consumers and by bold new schemes being used by fraudsters.

Fraudulent applications have risen by 28% in the automotive sector in the past year. This has been concurrent with a substantial increase in legitimate applications, highlighting the audacity of fraudsters. The credit card sector has also witnessed a large increase in application volumes and fraudulent applications, rising by 37.9%. Similarly, the mortgage sector has experienced an 18.8% year-over-year increase in the fraud rate, with first-party fraud accounting for 54% of all fraud types observed in Q2 2023, up from 46.5% in Q1 2023.

“With respect to mortgages, some homebuyers hoping to enter a pricey real estate market are willing to fudge their salary numbers on an application,” said Carl Davies, head of fraud and identity, Equifax Canada. “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.”

The automotive industry faced supply chain challenges and reduced production during the COVID-19 pandemic. As these issues have gradually resolved, there has been a pent-up demand for vehicles, leading to a surge in applications from consumers looking to purchase or lease vehicles. Davies explains it has also encouraged fraudsters and car thieves to be more brazen in targeting auto dealerships.

“Auto theft rings are now more cunning than ever in their use of very convincing fake IDs,” said Davies. “Auto dealers and their sales staff face a range of tactics from fraudsters. Dealerships need to enhance their verification processes and equip their staff with the tools to effectively detect and prevent increasing identity fraud.”

Identity fraud has emerged as a pressing concern within the automotive space, constituting 16.2% of all fraudulent applications in Q2 2023.

The creation of synthetic identities has become a familiar and concerning practice among fraudsters concerning credit cards due to its effectiveness in evading detection and carrying out various types of financial fraud. Rather than using entirely fake information, fraudsters combine real and fake details to carry out their crimes.

“Credit card fraud is a pervasive and evolving challenge in the financial sector,” said Davies. “With the increase in fraudulent applications and the dominance of identity fraud, it’s imperative for consumers to remain vigilant in monitoring their credit card statements. Financial institutions must also ensure that their fraud detection strategy and technology are up to date to stay ahead of the ever-bold fraudsters.”

Identity fraud continues to be a primary method used by fraudsters, making up 68.5% of all fraudulent credit card applications, as demand for credit cards surpasses pre-pandemic levels.

To help combat fraud, Equifax Canada developed FraudIQ Manager to streamline application reviews. The fraud prevention platform combines advanced analytics and consortium-based fraud protection into one solution.

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