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CAP hpi is urging motor dealers not to fall foul of a new type of scam emerging in the used car market.
Clearance fraud involves highly organised scammers deliberately targeting sellers who they know are looking to sell a vehicle which may still have an outstanding finance agreement on it.
Once the fraud against the vendor is complete, the vehicles are sold on to dealers who believe the car to be finance clear.
Cap hpi and a number of car buying organisations have already started working together to highlight this new type of motor finance fraud.
Wendy Swaine, head of retail at cap hpi, said: “This is a particularly worrying new trend that both dealers and consumers need to be aware of. Unsuspecting motorists looking to sell their cars are being deliberately targeted by criminals who are able to tell that the vehicle is on finance.
“The financial implications for dealers could be very serious as they can potentially find themselves landed with a car on which finance funds have not been cleared, meaning that the car cannot be legally sold on.
“This type of scam is not only hitting the seller but also has serious ramifications for the trade, with dealers receiving the vehicle having not been able to detect any finance fraud until it’s too late.
“We are working to spread the word to dealers to be on notice for this type of fraud and ensure they have completed the necessary due diligence and checks before acquiring any vehicle such as checking the finance annotations on the vehicle.”
Although the actual scale of the clearance fraud is unknown, there have been over a dozen reported cases in London in recent months and one more recently in Scotland.
The scam is the latest in a series of elaborate vehicle frauds ranging from clocking and cloning to hire car scams and ringing, which cost the motor industry hundreds of millions of pounds every year.