Rocketing Fraud Levels Driven by Data Warns CIFAS

The frauds identified by the cross sector Members of CIFAS – the UK’s Fraud Prevention Service during the first quarter of 2012, confirm that the age of data-enabled fraud has truly arrived.

Of particular note during the first quarter are the following:

• Fraud was 30% higher in the first three months of 2012 compared with the same period in 2011, and 13% higher than the last quarter of 2011
• This was driven by a 40% increase in identity fraud, and an 86% eruption in the takeover of accounts
• Misuse of accounts by the genuine account holder rose by 13% compared with the same period in 2011 and is now the second most commonly kind of fraud committed.

Fraud problem grows

The increase in levels of fraud is alarming news, revealing the scale of the fraud problem currently blighting the UK economy. While improved detection techniques used by organisations will undoubtedly help to uncover more fraud, the levels and types of fraud being attempted and committed are a sobering reality check to businesses, public sector and individuals.

Identity related crime refuses to be beaten

As previously revealed, crimes relating to the misuse of personal data (e.g. identity fraud, including impersonation, and the takeover of accounts) constituted over half of all frauds in 2011. The most shocking finding from the first quarter of 2012 is that this surge has accelerated, with nearly two thirds of all frauds (65%) being directly related to the misuse of personal details, impersonation and takeover of accounts.

Richard Hurley, CIFAS Communications Manager, comments: “If anyone was sceptical about the role that identity data or personal details play in fraud, then these figures remove any shred of doubt. Businesses and organisations across the UK and beyond must now recognise that the rules have changed. Data and information – whether digital or not – can no longer be taken at face value. Nor can  processes and safety be assumed to be ‘someone else’s responsibility’. By not taking every step to guard their own personal data, both individuals and organisations are effectively leaving their doors and windows open for digital thieves to come and steal it.”

Misuse of accounts undermines businesses and consumers

The fraud challenge, however, is not solely created by financial criminals attempting to steal funds from innocent victims. Misuse of facility fraud (where a legitimately obtained account is used fraudulently – e.g. to receive stolen funds, or falsely claiming not to have received goods, cards, monies etc) has risen by approximately 13% since the first quarter of 2011. Most disconcerting, however, is that these frauds are as likely to be the result of financial pressures on otherwise honest people as they are to be attributable to those who unwittingly or knowingly allow their accounts to be used for criminal purposes, to receive and send illegal payments.

Richard Hurley notes: “Whether the motivation is criminal or simply desperation, these figures demonstrate a dangerous situation. Individuals must be aware that fraudulently misusing an account can have serious consequences, including the withdrawal of services. These figures also indicate that organisations need to do more to educate their customers, and help prevent them from getting into such situations.”

The challenge ahead

Richard Hurley concludes: “Improving fraud detection is excellent news, but prevention will always be better than cure. In these economically troublesome times, therefore, organisations must recognise that the challenges posed by misuse of details and accounts are severe, and invest in proven technologies and techniques to prevent losses to themselves and their customers. Individuals, equally, must recognise that their challenge is to safeguard their own details responsibly and take every step to remove risk, while recognising the truly counter productive effect that fraudulent use of their own accounts can wreak.”

About CIFAS

CIFAS is the UK’s Fraud Prevention Service with 260 Member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring, share dealing and the public sector.  Members share information on identified frauds in the fight to prevent further fraud.  CIFAS is unique and was the first data sharing scheme of its type in the world.  Other schemes modelled on CIFAS have been set up in Southern Africa and Germany.

The following tables show a summary of the statistics and the number of fraud cases recorded by CIFAS Members during the first three months of 2012 compared with 2011, broken down by the type of fraud identified.  Definitions are given below the table.

	Jan to Mar 2011	Jan to Mar 2012	% Change
Fraud cases identified	55,215	71,773	+30.0%

Fraud Cases Identified refers to each proven instance of fraud identified by CIFAS Members and filed to the CIFAS database.  Members must have sufficient evidence to take the case to the police although it is not mandatory that they do so.  A fraud case can involve multiple subjects and multiple addresses.

Fraud Type	Jan to Mar 2011	Jan to Mar 2012	% Change
Identity Fraud – Total	25,773	35,983	+39.6%
Application Fraud – Total	10,760	10,697	-0.6%
False Insurance Claim	104	69	-33.7%
Facility Takeover Fraud	5,660	10,501	+85.8%
Asset Conversion	133	95	-28.6%
Misuse of Facility	12,785	14,428	+12.9%
Victims of Impersonation	21,101	32,899	+55.9%
Victims of Takeover	5,761	10,584	+83.7%

Identity Fraud cases include cases of false identity and identity theft.

Application Fraud/False Insurance Claim relates to applications or claims with material falsehood (lies) or false supporting documentation where the name has not been identified as false.

Facility Takeover Fraud occurs where a person (the ‘facility hijacker’) unlawfully obtains access to details of the ‘victim of takeover’, namely an existing account holder or policy holder (or of an account or policy of a genuine customer or policy holder) and fraudulently operates the account or policy for his own (or someone else’s) benefit.

Asset Conversion relates to the sale of assets subject to a credit agreement where the lender retained ownership of the asset (for example a car or a lorry).

Misuse of Facility is where an account, policy or other facility is used fraudulently.