Double discounting fraud is a major problem facing the finance industry. Hundreds of millions of Dollars are annually lost to double discounting fraud related offences.

This fraud is committed when a person, as example, applies for finance on a motor vehicle. The finance is approved and the agreement signed. The vehicle is delivered to the client. In these events the client will become the owner of the vehicle, while the financing institution will remain the titleholder for the remainder of the period of the finance agreement. In these instances the vehicle will be registered the same with registering authorities.

The client will at some stage manipulate documentation in order to change the registration information at the registration authorities. In some instances the client may obtain a fraudulent registration document, which will be used in the next phase of the double discounting fraud process.

While the vehicle is still being financed by the initial financing institution, the client will now approach a second financing institution and apply for finance on the same vehicle, presenting a fraudulent registration document which will indicate him or her as the owner and titleholder of the vehicle. This crime is completed the moment the second financing institution approved the finance.

Generally the offender of this crime will utilize the funds; paid out by the second financing institution, for their own personal gain and this will not be used to settle the first financing institution.

In these events two institutions now claim interest over the same object financed by them. In the majority of instances the first contract holder will be the institution who has the legal rights on the object. Generally the second financing institution will suffer the loss.