Blog article
See all stories »

Identity Fraud - consumer apathy or lack of education?

The latest monthly statistics show the number of new identity fraud cases reported to CPP stands at its highest level since we started selling the insurance product back in November 2004.

In October, our resolution team took onboard 250 brand new cases of identity fraud and is currently working with those individuals to clear their names and rebuild their credit status. The composition of the identity fraud cases is also interesting. From a peak of 50 per cent in June 2009, account takeover has fallen to 35 per cent of total cases reported. It is, however, still the single most prevalent form of identity fraud reported to CPP.

Account takeover or facility takeover is typically when a criminal gathers information about the intended victim, and then contacts the financial organisation whilst pretending to be the genuine cardholder. They then arrange for funds to be transferred out of the account, or change the address on the account and ask for new or replacement cards to be sent to the new address.

The growth in account takeover has gone hand-in-hand with the recession. As lenders became more stringent on issuing new lines of credit, fraudsters looked to defraud existing account holders by taking over their accounts where there was a more certain and accessible pool of credit. The latest CIFAS statistics backs up this assertion reporting application fraud decreasing by nearly a quarter in the first nine months of 2009 verses the same period in 2008.

The recession has therefore changed the way fraudsters operate – it will be interesting to see if application fraud increases as economies in the US and UK improve in 2010.

Elsewhere the increase in the total number of identity fraud cases is also interesting. In the first nine months of 2009, we have seen a 33 per cent increase in the number of cases reported by CIFAS to over 72,000. And a 36 per cent increase in the numbers of victims of impersonation to over 59,000.

This begs the important question: are UK consumers becoming apathetic to the threat of identity fraud even as they continue to fall victim in ever increasing numbers, or conversely, has the financial services industry done enough to educate consumers about the threat of this insidious crime?

Given the consequences can be serious and sustained, one would hope the latter.

 

4557

Comments: (4)

A Finextra member
A Finextra member 17 November, 2009, 09:36Be the first to give this comment the thumbs up 0 likes

"Are UK consumers becoming apathetic to the threat of identity fraud even as they continue to fall victim in ever increasing numbers, or conversely, has the financial services industry done enough to educate consumers about the threat of this insidious crime?"

Have you seen the movie "Confessions of a shopaholic"? At one point in the movie, Rebecca Bloomwood (played by Isla Fisher) was reviewing her monthly credit card statement. She showed dismay for each transaction she recognized and started celebrating when she saw a transaction that she thought she did not make. That celebration was cut short after her co-worker explained that they all chipped in to buy a gift for a co-worker and gave the money to Rebecca. Hence, Rebecca bought the gift by charging it to her credit card.

Rebecca's mood changed to happy because she thought that someone had used her card account fraudulently. It's a credit card and this really wasn't her money. She was ready to call her bank to dispute the entire bill. 

This scene in the movie is quite telling of credit cardholders apathy towards identity theft. It could also very well apply to any credit account. It's the banks' money, not the consumers' money!

I think that it would be quite logical to conclude that consumers do have a different reaction about identity theft when it concerns their own money. Consumers are the opposite of apathetic when it concerns prepaid cards, debit and ATM cards.

A Finextra member
A Finextra member 18 November, 2009, 11:24Be the first to give this comment the thumbs up 0 likes

A curious state of affairs indeed. The average retail account holder doesn't give a damn because the odds are the bank or credit card company will refund them and foot the bill for the fraud. When they do have their identity stolen, they are naturally angry because someone didn't protect it for them, and confused because there isn't a breakglass solution to get it back.

But why should the industry always pass the metaphorical buck to the customer? It isn't yet more "customer education" that's needed since they are already overburdened with cries to eat better, play nice on the internet, exercise, vote, hide their PIN at terminals etc etc.

The financial services industry should recognise the fact that they are in the trust business, and trust goes with security. If the industry made greater efforts to ensure the requests for credit come from the genuine identity then the problem would largely go away.

 

A Finextra member
A Finextra member 18 November, 2009, 12:16Be the first to give this comment the thumbs up 0 likes

I would like to think lenders have learnt from the current climate and are more stringent on lending and application rule bases are NOT changed significantly.

This however does not help with the number of data compromises on line. The first thing a victim will say to me is

Victim "How has this Happened?"

Answer , "Likely to be on the internet"

Victim Response "I only use secure sites"

Thaty may be so but that doesn't stop Website merchant attacks we see or hear so much about and is all kept hush hush from the general public.

I think the education is there to an extent but maybe should be more publicy available so possible undetected victims can be more alert to their account runnings.

It also doesn't help consumers are turning more to paperless options, here we are relying on them to check statements for unusual activity. These consumers too would be less likely to notice their address has been changed as they wouldn't be receiving their statements.

 

 

A Finextra member
A Finextra member 18 November, 2009, 15:13Be the first to give this comment the thumbs up 0 likes

Education isn't enough-it's time we focus on empowerment, by giving individuals controls and real-time information over their accounts and identity records. Financial providers and vendors will enjoy the benefits of acquisition, cross-sell and loyalty as they share control with account-holders, teaming up to fight a common criminal. Current banking systems are paternalistic, and if education is the primary solution then we're in a sorry state of affairs. Consumers know what's best, and contrary to common reports there is nyet a shred of evidence to suggest that zero-liability provisions reduce consumer motivation to protect themselves. Give power to the identity-holders and they'll vote with their wallet, and meanwhile identity criminals will lose in the "two-against one" battle. We publish a report ("Safety Scorecard") that ranks top US banks and issuers on 50 individual customer-involved safety criteria, and it's a detailed, research-based roadmap of what features (not just education) are required to do this. 

Blog group founder

Member since

0

Location

0

More from member

This post is from a series of posts in the group:

Online Banking

This community is for discussion of developments in the e-banking world, including mobile banking. This can include all the functional, business, technical, marketing, web site design, security and other related topics of Internet Banking segment, including public websites of the banks and financial institutions across the globe.


See all

Now hiring