Mortgage applications are also affected
A recent Equifax Canada survey has shed light on the growing concerns among Canadians about increases in fraud, particularly as economic pressures continue to mount.
Cherolle Prince, who leads Equifax Canada's fraud and identity management consulting, pointed out a direct correlation between financial stress and the likelihood of fraud: "Any time you see financial stress or an economic downturn, inevitably... the motivation to commit fraud increases.” The survey points out a strategic focus by fraudsters on the banking sector, where they seek additional credit or employ various identities to borrow more from financial institutions.
While there's been a slight dip in overall fraud rates from their 2022 peak, identity fraud is still on a notable rise. This type of fraud now makes up about three-quarters of all fraudulent applications in the fourth quarter, jumping up from around 65% the previous year.
Additionally, there's been a noticeable uptick in fraud within mortgage applications, increasing by 9.9% in the fourth quarter compared to the same timeframe in 2022, with the highest rates observed in Ontario. Prince notes two common types of frauds: first-party fraud and true-name fraud. The former is when individuals provide false information to qualify for a mortgage they can't afford, while the latter is when identity is stolen and used for fraudulent purposes.
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In response to the rising tide of fraudulent activities, Prince advises lenders and businesses to heighten their alertness and adapt their strategies to the evolving market trends. She recommends a closer examination of any red flags among applicants.
"Anything that may propose a certain level of risk, take a closer look and validate that information immediately," Prince said, stressing the need for a deeper scrutiny beyond just accepting documents or application details at face value.
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