2006 Fraud Trends

The analysis of fraud trends during 2006 by CIFAS – the UK’s Fraud Prevention Service – reveals a number of key points (numerical tables are shown in the Notes for Editors below):

Identity theft cloud has a silver lining

Although the number of victims of impersonation was up by 19.91% (at 67,406) when compared with 2005, and the number of attempted identity frauds identified by CIFAS Members was up by 21.57%, the situation is in fact much better than these statistics imply. This is because the rise in the number of attempted ID frauds detected by CIFAS Members before an account was opened increased during 2006 by almost 40%. This means that a higher proportion of the victims whose identities had been compromised never reached the stage of having money stolen from their accounts, or having products taken out in their name.

The top three false or stolen documents used by fraudsters to attempt identity fraud in 2006 were: utility bills, then passports, and then bank statements.

Attempted fraud hits record levels

While the growth in attempted identity frauds increased by 21.57%, attempts to commit fraud by including lies in application forms (eg for finance, insurance or other products) also increased, but less steeply (by 8.19%). While both of these figures represent record levels of attempted fraud, this trend would be far more worrying if CIFAS Members’ early detection rates had not also increased.

Sharing data on frauds prevents huge financial losses

CIFAS’s 250 Member organisations share data on identified frauds in the fight to prevent further fraud and, by doing so, avoided losses during 2006 totalling more than £789,816,000. This figure represents an increase year on year of 15.89%. This means that fraudsters were frustrated in their attempts to steal £90,162 an hour during 2006, up from £77,802 in 2005.

Sharp increase in Facility Takeover Fraud

The volume of facility takeover fraud is low when compared with identity fraud and application fraud. Nonetheless, the 63.4% increase in this kind of fraud experienced by CIFAS Members during 2006 is noteworthy. It is difficult to pinpoint the cause of this, but could be attributable in part to the rise seen in online ‘phishing’. (Phishing is the use of ‘spoof’ emails and websites that are designed to deceive recipients into divulging personal financial data (e.g. credit card numbers, account numbers, user names, passwords, etc.) to facilitate identity fraud).

Notes to Editors:

1. CIFAS is the UK’s Fraud Prevention Service with over 250 Member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and share dealing. 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 South Africa, Ireland and Germany.

2. The following tables show a summary of the statistics and the number of fraud cases recorded by CIFAS Members during 2006, broken down by the type of fraud identified. Definitions are given below the table:

	Jan to Dec 2005	Jan to Dec 2006	% Change
Fraud Cases Identified	152,176	171,488	12.69%
Financial Benefit/Losses Avoided	£681,545,210	£789,816,426	15.89%

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 cases and multiple addresses.

Financial Benefits. This is the amount of money that Members of CIFAS reported that they have saved through being alerted to previous frauds by CIFAS warnings.

Fraud type	Jan to Dec 2005	Jan to Dec 2006	% Change
Identity Fraud - Account Opened Identity Fraud - Account Not Opened Identity Fraud - TOTAL	28,737 37,380 66,117	28,340 52,037 80,377	- 1.38% 39.21% 21.57%
Proportion of Identity Fraud detected by CIFAS Members and stopped before an account was opened	56.5%	64.7%	N/A
Application Fraud - Account Opened Application Fraud - Account Not Opened Application Fraud - TOTAL	8,346 50,681 59,027	8,805 55,055 63,860	5.50% 8.63% 8.19%
Proportion of Application Fraud detected by CIFAS Members and stopped before an account was opened	85.9%	86.2%	N/A
Facility Takeover Fraud	2,849	4,665	63.74%
False Insurance Claim	387	395	2.07%
Asset Conversion	490	440	-10.20%
Misuse of Facility	23,306	21,751	-6.67%
Victims of Impersonation – Account Opened Victims of Impersonation – Account not Opened Victims of Impersonation - TOTAL	25,171 31,042 56,213	23,858 43,548 67,406	-5.22% 40.29% 19.91%

Identity fraud cases include cases of false identity, identity theft, account takeover and other impersonation situations.

Application fraud/False insurance claim relates to applications or claims with material falsehood or false supporting documentation where the name has not been identified as false.

Facility takeover 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 (or someone else’s) benefit.

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

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.

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