UK fraud up 16% in 2008 - Cifas

Fraud in the UK jumped nearly 16% in 2008, with 214,342 cases identified throughout the year as recession-hit Brits turned to crime "to make ends meet", according to Cifas.

The fraud prevention service says the rise is partly attributable to a massive 207% jump in facility takeover fraud - where a third party accesses an account, usually through phishing, telephone scams or the interception of cards and statements. The number of accounts taken over rose from 6272 in 2007 to 19,275 last year.

Misuse of account fraud - where criminals fraudulently use an existing account, policy or other facility - also rose steeply, up 69% from 23,400 to 39,447. Cifas says bank account products are the most commonly misused, with criminals paying in false or altered cheques or fraudulently obtaining benefits.

The number of victims of impersonation for the purpose of identity fraud fell 3.7% to 62,658. However, there was an overall increase of 5.7% for successful ID fraud to 34,011.

Explaining this contradiction, Cifas says the scarcity of credit being offered means fraudsters are attempting to create creditworthy fake identities rather than impersonating genuine people who may still have applications rejected by lenders.

Peter Hurst, chief executive, Cifas, says: "With Britain now in recession, a significant rise in fraud is inevitable, as people turn to crime to make ends meet. These figures are just the beginning. They also show very clearly that fraudsters adapt their methods in response to changes in the financial markets."

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Comments: (2)

A Finextra member 26 January, 2009, 13:36

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Unfortunately, one boom business in 2009 is for certain and that is the growth in online crime, especially with many people losing their jobs, bills to pay and desperation setting in across the globe, not just the UK. One worry is the loss of jobs in the corporate and finance sector where former employees take away key knowledge that could pose a threat to accounts.

However we hope that the risk management teams of the corporate and financial institutions are working closely with HR to ensure such a risk is mitigated.

Further, there are quite a few actions the consumer can do to protect themselves from Identity Fraud and or Online Fraud but we need the financial institutions to assist people understand their potential to have their security, or their bank accounts, or their Credit Card details compromised and build again a responsible Trust relationship between the financial institutions and the account holder. We need to be able to tell people before they login or enter private and confidential details that their PC or mobile computing device is compromised, by providing real time feedback in the web 2.0 environment. For the financial institution it is also important to be able to make a decision prior to login or a purchase based on the security health and risk profile of the PC or mobile computing device.

Until this is done we will see online crime continue to grow.

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A Finextra member 04 February, 2009, 23:54

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A major contributor to the growth in fraud related to "facility takeover", or account takeover, is the stunning rise in the number and severity of data breaches. Just in the past few weeks notifications of massive breaches have been sent by RBS Worldpay and Heartland Payment Systems in the US (the largest breach, by far, ever reported). I've examined these connections on my blog at: http://www.ethoca.com/fraudintel/2009/01/27/heartland-data-breach-underscores-dark-trend/

While preventive actions and greater risk awareness can slow this alarming trend, breaches can't ever be completely stopped. Nor can the rise in criminal activity due to a slowing economy. Fraud management requires a multi-point effort starting with improving front-end security and risk awareness, but also effective detection and prevention technologies and practices at the back-end.

However, to make significant inroads into reversing the growth in fraud, we need a 360 degree view of the fraudster -- something that can only be obtained by broad global collaboration by merchants, law enforcement, anti-fraud vendors, payment processors and card issuers. The clarion call's been sounded. How will we respond?