Bank account and card fraud on the up in UK - Cifas

Source: Cifas

Analysis of frauds recorded by Members of CIFAS - the UK's Fraud Prevention Service during the first six months of 2011, has revealed some significant shifts in fraudulent activity.

Key findings include:

* 111,504 confirmed frauds were recorded to the National Fraud Database by CIFAS Members in the first half of 2010; an increase of 10% compared with the second half of 2010.
* Identity frauds have remained at nearly one in two of all frauds recorded (46%), with a further 10% of frauds involving the illegal hijacking of a victim's account, proving the continued value of personal and financial data to the modern financial criminal.
* Frauds involving the fraudulent misuse of an account or facility have risen to their highest levels since 2009, and account for a staggering 24% of all frauds.
* Bank accounts and plastic card accounts (e.g. credit or store cards) remain very popular targets for fraudsters, with plastic card accounts being those most commonly hijacked (38% of all account takeover cases).
* Changes in the reasons for recording mortgage fraud indicate that this type of fraud now has different underlying motivations.

Personal details the most valuable for fraudsters

Despite the overall decrease in fraud levels recorded last year, the first six months of 2011 have seen an increase in fraud of 10% when compared with the last half of 2010. Most tellingly - over half of all frauds recorded related to impersonation and identity fraud (46%) or the takeover of a victim's accounts (10%).

CIFAS Communications Manager Richard Hurley notes: "Someone's personal and financial details are like a licence to print money for the modern fraudster. Whether they were obtained digitally or physically, the fact that over a half of all frauds in some way relate to the misuse of other people's personal details clearly underlines the severity of this threat. It is vital, therefore, that in due course checks by public sector organisations for passports, driving licences, benefits and tax credits should also be made against this data."

Account misuse - the returning threat

The misuse of accounts, products or services is - of cours- of course - nothing new. More revealing, however, is that this kind of fraud now accounts for nearly a quarter of all recorded frauds (a 13% increase from the last six months of 2010). Further analysis reveals that frauds relating to the process of paying in false or altered cheques that subsequently bounce or fraudulent electronic payments represent more than one in two of all misuse of facility frauds.

Richard Hurley comments: "In these difficult times, the reappearance of the age-old problem of the fraudulent cheque is, perhaps, unsurprising. What is most revealing, however, is not only the scale of this problem but also that the average age of those involved in misuse of facility fraud is younger than the overall average age of fraudsters.

"Identity checks required by money laundering legislation inhibit fraudsters from laundering criminal funds through newly opened accounts. Instead, as these figures demonstrate, criminals increasingly recruit victims - especially young victims - into being their money mules through employment scams or mystery shopping sites (among others). CIFAS has drawn attention to money mule operations previously, and we strongly urge all businesses and consumers to be wary of such scams and activity taking place under the disguise of reputable, honest, transactions."

Bank accounts and plastic cards still a fraudster's favoured target

Industry initiatives such as improved security for online transactions or Chip and PIN have doubtlessly prevented much fraud. In spite of this, however, both bank account fraud (7%) and plastic card fraud (8%) have increased in the first half of 2011, compared with the last six months of 2010. As fraudsters commit their crimes in order to generate funds, goods or services, therefore, the desirability of bank accounts, savings products or plastic card accounts should not be underestimated - and the fight against fraud must be redoubled by organisations and individual consumers.

Mortgage fraud shifts due to economic climate

Another desirable product is - of course - a mortgage. Changes in the reasons for recording mortgage frauds, however, indicate that the kind of frauds first seen during the housing boom are no longer being uncovered - with more frauds now bearing the hallmarks of individuals struggling to meet lenders' current requirements.

In the first six months of 2011, the most common reasons for a mortgage fraud being recorded included the failure to disclose a previous address in an attempt to hide an adverse credit history, false proof of income and false employment details. As the current economic situation prevails, therefore, CIFAS warns individuals against attempting to defraud mortgage lenders in these ways, and urges businesses to continue their due diligence against such attempts.

Closing comment from CIFAS

Richard Hurley concludes: "What Fraudscape Bulletin demonstrates is that the volatility in fraud previously identified by CIFAS shows no signs of abating. Whether it is the organised criminal, the opportunist or the genuinely needy who commit it, the changes not only in frequency, but also method, prove that businesses, individuals and public organisations alike must start taking this threat more seriously. CIFAS strongly urges that an active, preventative, approach is taken to tackling fraud, as opposed to a costly clean up effort designed to limit damage after the fact."

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