UK financial fraud rising - CIFAS

Source: CIFAS

At the end of the first quarter of 2007, data provided by Members of CIFAS, the UK's Fraud Prevention Service, showed some disquieting developments.

Growth is not limited to identity fraud

Comparing the first quarter of 2007 with the same period in 2006, CIFAS Members have seen growth in most types of financial fraud.

Application fraud (where fraudsters tell lies on application forms in order to obtain credit, insurance or other products) increased by 21%, with 19,239 such frauds detected and filed by CIFAS Members.

CIFAS Members also filed 21,122 cases of identity fraud during the quarter - an increase of 12% - when compared with the same period last year.

Finally, although the scale of facility takeover cases filed is smaller, the increase between the first quarter of 2006 and the first quarter of 2007 was surprisingly steep at over 34%.

Unprecedented surge in current address fraud

One of the most disturbing developments revealed by the latest figures is the swing away from previous address fraud towards current address fraud. Current and previous address frauds rose in number from 10,976 to 12,690. Current address frauds now represent 60% of these frauds, compared with just 44% a year ago.

Current address fraud is a type of identity fraud where the victim lives at the "current address" given on the fraudulent application. The perpetrator of the fraud is often also resident at the same property as the victim. In such cases, the fraudster applies for, and uses, products in the name of the victim whose property they share. The fraudster will generally have access to, or can intercept, the victim's post, for example where individuals are resident at a property that has a communal mailbox with shared access. Other contributory factors to current address fraud can include the abuse of Companies House data, data breaches, fraudulent mail redirections and bin raiding.

Previous address fraud is where the fraudster misappropriates the identity of another person and falsely claims that the victim has recently changed address. Due to the short period of time at the 'new' address any CCredit Reference Agency (CRA) checks are performed primarily against the 'previous' address where the victim is, in reality, still resident. In such circumstances, the fraudster will usually apply in the name of the victim for new products and will undertake facility takeover fraud from the 'new' address.

Fraud losses of £94,000 per hour prevented by CIFAS Members

Members of CIFAS (e.g. banks and building societies), by detecting and recording these frauds in order to prevent further fraud, avoided financial losses during the period of £94,000 per hour, compared with £74,000 per hour during the same period in 2006.

CIFAS Chief Executive, Peter Hurst, said "These quarterly figures show a worrying escalation in many types of financial fraud. The surge in current address fraud is of particular concern, because in order to perpetrate it, the fraudster effectively needs a perfect data set, which argues that fraudsters are becoming more sophisticated in their methods, and are accessing more data about victims. The good news, of course, is the fact that CIFAS Members, by detecting and recording frauds, denied fraudsters during this quarter a total of £94,000 every hour of every day. "

"But the scale of fraudulent activity is alarming. It emphasises the need for businesses constantly to be alert when dealing with applications. It is testament to our Members that their skill in the detection of such frauds that losses are kept at a manageable level."

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