New figures from Experian show that current account frauds have more than doubled in the last two years.
The rate of current account fraud in Q2 2016 was 128 fraudulent applications in every 10,000. This was the fifth consecutive quarter where current account frauds breached 100 in every 10,000. When the analysis first began in Q3 2013, the current account fraud rate was just 48 in every 10,000.
Experian’s Fraud Index, which looks at fraudulent applications for a range of financial products, also saw an increase in card fraud during April, May and June this year. This reached 48 fraudulent applications in every 10,000 applications - the second highest in the 12 quarters since the analysis began.
The Index, which highlights detected and prevented frauds, also provides valuable insight into where fraudsters are devoting their efforts. It sounds a warning to the banking and financial services industry about the growing risk of financial fraud, and helps providers to identify the customers who are most at risk.
Nick Mothershaw, fraud expert from Experian, explained: “Current account and card fraud have increased in step over the last two years as the two are very much linked. Current accounts are a front door for fraudsters looking to access a wide range of other financial products, and clearly, fraudsters are going for the credit cards for quick access to funds.
“Any transaction a person makes, whether it’s transferring money between accounts, or buying a new TV, could be subject to fraud. Fraud will continue to evolve as fraudsters seek the greatest benefits for the least risks. While organisations are doing what they can to be fraud resilient, understanding who among their customers is being targeted most and taking steps to make them more aware is also vital.”
City dwellers suffer most from mortgage fraud
There was some good news as the study revealed that mortgage fraud fell slightly to 63 in 10,000 applications, significantly lower than the average of 81 per 10,000 over the last three years. This was mainly driven by a fall in first party fraud, where individuals may misrepresent themselves on their mortgage applications.
However, there was also an increase in third party mortgage fraud, from 4 per cent of all fraudulent applications to 5 per cent. This is significant because the sums involved are much higher than most other fraud cases.
City dwellers are high on the list as targets for fraudster. The most targeted are those settled extended families living in multicultural city suburbs (identified in Experian’s research as Urban Cohesion) - 22.6 per cent of all ID fraud in mortgages.
However, those people living in high value properties, in the centre of cities, with high status jobs (known as City Prosperity) are seeing the biggest increase in ID theft related to mortgage fraud. They now account for 10.3 per cent of all ID fraud in mortgages, compared to 7.3 per cent last year.
Mothershaw said: “Unfortunately fraudsters are very canny, and they either go for the easiest targets or the biggest potential ‘wins’. If they can find a way through the fraud defences, or manage to coerce professionals involved in the mortgage process, the pickings are rich.”
Experian’s Fraud Index is a quarterly analysis of fraud rates across a variety of financial products, from cards and current accounts to mortgages and car insurance. The analysis dates back to Q3 2013, when rates of current account and card fraud were at 48 and 21 in every 10,000 applications respectively.