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.
As we mark 30 years on the frontline of fighting fraud, we look at 30 facts about the past, present and future of this ever-evolving crime.
First recorded fraud: around 360 BC.
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.
1988: Cifas is born
Cifas was launched in 1988, as CIFAS, with just 7 member
organisations and 623 fraud cases filed to our database.
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
Authorised push payment (APP) scams are when an account holder is tricked into making a payment to a fraudster – total losses in 2017 were £236 million.
Sophisticated fraud prevention techniques have forced criminals to resort to offline tactics as well – targeting victims with social engineering to get their personal or login details.
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.
Cheque fraud – such as counterfeit, forged and fraudulently altered cheques – has decreased dramatically in the last decade, but still caused £9.8 million of losses in 2017.
'Romance fraud' is when someone creates a fake identity to enter into a relationship with the intent to steal either funds or personal information – Brits lost £41 million to romance fraud in 2017.
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.
In 2017, 253 victims reported to Action Fraud they had lost more than £23m to pension scammers – an average loss of £91,000 per victim.
As use of the 'Internet of Things' grows, the number of connected devices and objects is predicted to reach 20.4 billion by 2020.
"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.”
Ellie Burns, Product Marketing Manager, ThreatMetrix
AI could enable us to communicate via electronic thought signals in the future, but will you be sure of who you’re thinking to? Who will be able to hack and read your thoughts?
There is increasing attention being given to authorised push payment (APP) fraud and who is liable, with a 2018 consultation proposing it is placed on the receiving bank.
A new flagship court specifically designed to tackle cybercrime, fraud, and economic crime is being built in City of London – expected to be completed in 2025.
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.
As computers get ever smaller, transistors could be the size of dust particles within a decade. ‘Smart dust’ could be used by criminals to listen to phone calls, deduce what you’re typing or steal your fingerprint.
Artificial intelligence can now be used to effectively identify credit card behaviour patterns that are irregular for specific customers, and 'deep learning' technology will be used more and more to assess financial transactions.
AI can recognise facial expressions, lip-read and replicate your voice – all useful capabilities for a future fraudster pretending to be you.
Dramatically increasing numbers of young people acting as ‘money mules’ and becoming victims of online scams will mean an increased focus on education about the effects of fraud.
“The biggest thing people need to think about is education – education of clients, education of customers. I think that is really going to turn the tide against fraudsters.”
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'.