Identity fraud occurs when someone steals and uses your personal information to impersonate you, often for financial gain. Identity fraud commonly involves opening new bank accounts, applying for credit cards, or taking out loans in your name.
A recent report by Equifax Canada revealed a significant rise in identity fraud. In the fourth quarter of 2023, identity fraud accounted for a staggering 75.21% of all fraudulent applications across various sectors, a sharp increase from 64.7% in the previous year.
In the automotive sector, fraudulent applications have also surged by 28% in the past year. The credit card sector has experienced a similar trend, with both application volumes and fraudulent applications increasing by 37.9%.
Identity fraud has significant financial implications for dealers. In 2023, Canada's private auto insurers paid out a record-breaking $1.2 billion in theft claims, three times more than what was paid in 2018. This trend continued in the first half of 2024.
In Ontario alone, auto theft claims increased by 329% during the same period. Of the over $700 million in losses across Ontario, $500 million occurred in the Greater Toronto Area (GTA) alone.
To combat identity fraud, lenders, dealers, and integration partners share a responsibility for implementing regulations. These regulations aim to authenticate genuine buyers and prevent fraudulent applications.
Various tools are available to help lenders, dealers, and integration partners authenticate real buyers. These tools include:
By utilizing these tools and implementing effective regulations, dealers can protect themselves from the financial and reputational damage caused by identity fraud.
