Fraud research reveals disturbing trends

Research by CIFAS - The UK's Fraud Prevention Service, reveals that more people are lying on application forms to obtain credit, insurance and other products; that they are getting into financial difficulty sooner; and are turning to fraud at an earlier age.

The research looked at the application fraud cases filed on the CIFAS database, comparing the situation in 2004 with that in 2007.

Large Increase in number of application fraud cases

The number of application fraud cases filed on the CIFAS database increased from 62,000 in 2004 to 77,000 in 2007, an increase of more than 24%.

In each of these cases, individuals had told lies (" material falsehoods" ) on the application form, or had supplied false or altered documents to support their application.

More application frauds are being successful

In 2004, just over one in every 10 fraudulent applications was successful, resulting in 7,200 cases where the fraudster obtained the product he or she had applied for. By 2007, that had risen to almost one in 5, resulting in 14,500 cases of the fraudster being successful.

Products where fraudsters have seen increasing success since 2004 include: bank accounts, plastic cards and to a lesser extent mortgages, although communications products and loans have seen improved prevention rates.

Most frequent lies

The lies most frequently told on applications include:

Lying to conceal a poor credit history. Fraudsters recognise that a poor credit history will affect the outcome of the application, but fail to realise that verification checks are made. More than 64% of the application frauds filed on the CIFAS database fall into this category.

Exaggerating the length of time the applicant was resident at an address. Fraudsters believe that stability increases creditworthiness but do not realise that verification checks are made. 13% of the application frauds filed on the CIFAS database fall into this category.

In addition, the use of false documents to support an application has increased considerably since 2004. The false documents most frequently used to support an application are passports, utility bills and bank statements.

Fraudsters reinforce sexual stereotypes

In 2004, 68% of application fraudsters were men and 32% were women. Although by 2007 the shift was small, with 66% male fraudsters and 34% female, this was the first time that women represented more than one third of all application fraudsters.

In 2004, fraudulent applications from men tended to be for asset finance (mostly for cars) and bank accounts, women were more likely to apply for loans and plastic cards. By 2007, male fraudsters were more likely to apply for asset finance and insurance, whereas female fraudsters more likely to apply for communications products (mobile phones) in addition to plastic cards.

Fraudsters are getting younger

In 2004, the average age of an application fraudster was, for men, just over 38, and for women, 37 and a half. By 2007, that had reduced to 35 years for men, and for women, just under 34 years of age.

Key changes between 2004 and 2007

The key changes in application fraud between 2004 and 2007 are:

the slight increase in the proportion of women committing application fraud.

that the average age for making fraudulent applications is decreasing year on year both for men and women.

female fraudsters are increasingly alternating between using their married or maiden name on applications, depending on which they feel will yield them the most success.

lying about employment has become less prevalent, being replaced by the use of false documents - particularly by men.

Where the fraudsters live

The research revealed that the top five postal districts where male application fraudsters live are SE (South East London), then E (East London), B (Birmingham), N (North London) and M (Manchester).

For female fraudsters, the top five are: SE (South East London), then E (East London), B (Birmingham), G (Glasgow) and N (North London).

CIFAS Chief Executive, Peter Hurst, comments "This research shows very clearly that all organisations need to be vigilant when looking at applications. The increased use of false documents means that front-line staff must be trained to spot them. This training should not be confined to identity documents like passports, where guidance in how to spot fraudulent ones is readily available. It should also concentrate on other documents such as utility bills and bank statements."

CIFAS Head of Communications, Kate Beddington-Brown, continues "This research also reveals some deep seated socio-economic problems. With the increasing number of people lying to hide a poor credit history, and the fact that the age of application fraudsters is decreasing year on year, it is clear that people are getting into financial difficulties and turning to fraud earlier."

Peter Hurst concludes "Those who think that lying on application forms will give them any advantage need to realise that their efforts are counter-productive. Fraud data sharing means that such lies are easy to detect and, far from enhancing an applicant's chances, will be detrimental to their application. Telling the truth, even if it is slightly less palatable, remains the best policy. With the Government making it possible for details of frauds against our public services to be shared later this year, this will become equally true irrespective of whether the individual is dealing with a public or a private sector organisation. We are all determined to make the UK a hostile place for crime of this type."