Falling fraud levels to be greeted with caution warns CIFAS
20% fraud decrease in first quarter of 2013
The frauds identified by the cross sector Members of CIFAS – the UK's Fraud Prevention Service during the first quarter of 2012, bring some good news, but should be treated cautiously as numerous contributory factors may be at work.
Of particular note during the first quarter were the following:
- Fraud was 20% lower in the first three months of 2013 compared with the same period in 2012, with decreases seen in all the major types of fraud
- Identity Fraud still accounted for the majority of all fraud, at 52% of all fraud recorded during the first quarter
- Misuse of accounts by the genuine account holder, and the takeover of an account by a third party (frauds which frequently link to other organised criminal activity) remained the second and third most common types of fraud respectively.
Fraud decline is good news
After record levels of fraud were recorded in both 2011 and 2012, the 20% decrease seen in the first quarter of 2013 (compared with the same period of 2012) can be seen as a positive development. This decline must be viewed cautiously, however, as overall patterns replicate many of the trends witnessed during 2012, with several challenges still facing consumers and organisations.
Identity related crime remains the biggest threat
While the level of identity fraud (cases where the fraudster has impersonated an innocent victim or used completely fictitious identity details to obtain products and services) has decreased from the level seen during the first quarter of 2012, the scale remains daunting. 52% of all fraud recorded during the first quarter of 2013 was identity fraud, with facility (or account) takeover fraud – where a fraudster hijacks the running of an existing account – comprising 14% of all frauds recorded during that period . The total of the frauds related to the misuse of personal data therefore constituted 66% of all frauds in 2013 so far, an increase from the 65% seen for the whole of 2012.
Richard Hurley, CIFAS Communications Manager, comments: “CIFAS has previously commented that organisations and individuals now exist in an age of data driven fraud. This signals a challenge to all parties – from consumers to financial institutions, government to police – to review the steps we all take to combat fraud and not simply to assume that security is ‘someone else’s responsibility’. While numbers may seem to be down for the moment, the continued prevalence of data driven identity related crimes must surely signal that much still remains to be done.”
Broader criminal activity
Misuse of facility fraud (where a legitimately obtained account is used fraudulently – e.g. to receive stolen funds) also decreased during the first three months of the year but, like identity fraud and facility/account takeover, the presence of other organised criminality is a contributory factor.
Richard Hurley notes: “Whether it is allowing an account to be used to receive stolen funds, or trying to use stolen funds to settle bills, there are links between the fraudulent misuse of many accounts and the impersonation of innocent victims or the takeover of their accounts. Fraud is a crime that is frequently part of a larger, tangled web and the concept of organised criminals only being mafia style gangsters is long gone. However, many frauds will not be a part of a larger conspiracy, but will be committed by opportunists. The onus therefore is really upon law enforcement and organisations (both public and private) to educate people of the dangers and risks and also to help individuals to take decisive action to combat fraud.”
The challenge ahead
Richard Hurley concludes: “Many factors will have contributed to the decrease in fraud recorded over the last quarter; from recent news stories featuring the latest scams targeting individuals (thus putting people on their guard) , through to improvements to some fraud prevention strategies used by organisations. As such, the fall in fraud levels is excellent news, but while patterns within the recorded fraud levels replicate those seen in recent years, the battle is far from won. There were still over 56,000 cases of fraud recorded to the CIFAS National Fraud Database between January and March 2013. Prevention will always be better than cure and, as these economically troublesome times continue, much fraud might still be escaping full investigation and identification. This recent decrease in the quarterly figures must therefore be viewed very cautiously as organisations, law enforcement and individuals still have much to do to keep themselves safe and protected.”
Notes to Editors:
CIFAS is the UK's Fraud Prevention Service with 270 Member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and 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 2013 compared with 2012, broken down by the type of fraud identified. Definitions are given below the table.
Jan to Mar 2012
Jan to Mar 2013
Fraud cases identified
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.
Jan to Mar 2012
Jan to Mar 2013
Identity Fraud – Total
Application Fraud – Total
False Insurance Claim
Facility Takeover Fraud
Misuse of Facility
Identity Fraud cases include cases of false identity and identity theft.
Application Fraud/False Insurance Claim relates to applications or claims with material falsehoods (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.