Fraud cases up by 15%

At the end of the third-quarter of 2008, data provided by the 270 Members of CIFAS - the UK's Fraud Prevention Service - shows that recorded fraud cases are up by 15%.

CIFAS figures also confirm that the rises in facility takeover fraud and misuse of facility fraud are a continuing trend and not a short term change.

Frauds of choice are double trouble

Previous figures from CIFAS highlighted the sudden rise in facility takeover fraud, and this trend has continued. From January to September 2008, facility takeovers increased by 174%.

Facility takeover (also known as account takeover) occurs when the fraudster hijacks an individual's account(s) in order to 'take over' and control one or more of them.

As previously noted by CIFAS, this steep increase in facility takeover is accompanied by a similar rise in misuse of facility fraud. Misuse of facility is where the fraudster uses an account, policy or other facility for a fraudulent purpose. The first nine months of 2008 have seen a rise of 74% when compared with the same period in 2007.

Kate Beddington-Brown, CIFAS Head of Communications, comments: "These figures demonstrate a real change to the fraud landscape. There is an endemic link between these types of fraud and fraudsters frequently use both methods: for example, taking over accounts for the purpose not only of withdrawing funds but also potentially to pay in suspicious transactions and then siphon off these transactions into other accounts."

Application fraud figures demonstrate the effects of the credit crunch

Attempts to commit fraud by including material falsehoods (lies) on application forms (e.g. for loans, credit cards or insurance products), showed an increase of over 4% during the first nine months of 2008 compared with 2007. The most frequent lie told remains the failure to disclose a previous address where the applicant's credit or insurance history has been impaired.

The proportion of application fraud cases that were spotted after the application was approved (‘granted'), however, shows a 19% increase compared with the same period last year.

These figures demonstrate that, although credit is undoubtedly less available, fraudsters are becoming increasingly savvy about the lending criteria being used and are trying to ‘play the system' to get around them (e.g. by not declaring previous adverse credit history).

Identity fraud figures continue welcome decline

One piece of very encouraging news, however, is that the recent downward trend in the number of identity fraud victims filed by CIFAS Members has continued. 54,713 cases were recorded in the first three quarters of 2008, a 4.5% decrease from the year before.

Top-ten postal districts for facility takeover fraud

An analysis of the residential addresses of recorded cases of victims of facility takeover fraud shows that the prevalence is greatest in the following ten postal districts (shown in descending order):

B33 Tile Cross, West Midlands
B37 Marston Green, West Midlands
SL6 Maidenhead
B36 Castle Bromwich
RG12 Easthampstead, Popeswood
SG8 Bassingbourn, Royston
CR0 Croydon
CF14 Cardiff environs
CM3 Chelmsford environs
SW16 Streatham

Of particular interest is the fact that a high proportion of victims of facility takeover fraud are found in the West Midlands and South Wales - a shift away from the traditional dominance of London and the South-East in fraud figures.

Peter Hurst, CIFAS Chief Executive, comments: "These trends underline the continuing changes in the fraudster's methodology.

"While it is difficult to pin down any single reason for these changes, there are various possibilities. In times of economic hardship, people increasingly turn to desperate measures including insider or staff fraud, which may well have contributed to the increase in facility takeover and misuse of facility fraud. The role played by organised criminals should also not be overlooked.

"What these figures demonstrate beyond doubt, however, is that the threat of fraud is increasing, and this is to be expected in such difficult times. The challenge for all companies is to combat this threat by increasing their investment in anti-fraud measures, at a time when budget-holders are increasingly looking for reductions. A "saving" made through not investing in anti-fraud measures is no saving at all but leads directly to bigger losses. After all, as our figures show, fraudsters are not using the current downturn in the economy as a reason for scaling back their activities."