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2018 marks the 30th year Cifas has been in operation. We've seen massive changes during that time – both in how fraud is committed and how we combat it, and also in the world we live in. Technology has revolutionised how we communicate and made the world a much smaller place. As society has changed, so has fraud, evolving and adapting to new technologies.
A ship owner called Hegestratus insured a ship loaded with corn. In fact, the ship had an empty hold, and he planned to sink his vessel, make it back to shore on a raft, and pocket the value of the boat and the non-existent corn.
After the deregulation of financial services in 1986, there was a rapid increase in levels of fraud as new players entered the market, such as retailers with their own store cards.
In the 1990s the most common type of fraud reported was application fraud – when an account is opened using fake or stolen documents in your name, using the account to withdraw cash, get credit, or find other ways to defraud you.
The 2000s saw a huge increase in identity fraud with people able to apply for products and services online – by 2004 it accounted for 40% of all frauds.
Pre-Internet identity fraud was a much more ‘specialist’ activity. But in the early days of the Internet the availability of false documents online – sold as novelty documents, which weren’t technically illegal – and instructions on how to use them, meant anyone could now commit fraud.
The Fraud Act 2006 came into effect in 2007, giving a statutory definition of the offence and defining it in three classes: false representation, failing to disclose information, and abuse of position.
The 2008 financial crisis impacted fraudsters as well – credit limits increased, meaning many fraudulent applications were declined as they failed the credit check.
In the last 10 years, the number of people fraudulently abusing their bank account has doubled – mostly money laundering activity such as ‘money muling’.
Identity fraud hit an all-time high in 2017 with more than 175,000 cases registered with Cifas – in 95% of those cases an innocent party was impersonated.
Cifas members prevented
£14bn in fraud
over the last 30 years
Fraud is the number one crime in the UK
is lost each year due to fraud – it accounts
for nearly half of all recorded crime
are recorded to Cifas every day – that's one every two minutes
Fraud losses at UK cash machines (such as via ‘shoulder surfing’ – criminals seeing the PIN number entered then stealing the card using distraction or pickpocketing) were down in 2017, but still reached the highest figures since 2009.
Fraud is never the ‘victimless crime’ it’s generally thought of – the gains of fraud often fund other harmful criminal activity such as terrorism, drug trafficking and people smuggling.
As of July 2018 the Banking Protocol – an initiative between police, banking institutions and Trading Standards, which aims to identify, and intervene in, vulnerable victims being defrauded – had accumulated nearly £31.5 million in prevented fraud and resulted in 240 arrests.
"The IoT is a veritable treasure trove for cybercriminals and fraudsters. Checking every box on their to-do list, the IoT has billions of vulnerable devices, a huge attack surface, no regulation and vast quantities of personal data.”
As use of blockchain grows, the anti-fraud world is paying more attention to the potential risks – a recent survey by EY found 32% of legal, compliance and anti-fraud professionals plan to adopt blockchain and distributed ledger technologies in 2018.
Natural-language analytics – looking for narrative patterns symptomatic of fraud in emails – could also be used in the future on text messages, social media interactions, dating site messages, even years-long online 'friendships'.