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Fraud Findings

by msecadm4921

The analysis of fraud trends during 2010 by CIFAS – The UK’s Fraud Prevention Service points to a 7pc reduction in the overall level of fraud, when compared with the previous year. The fraud prevention service CIFAS says that while this news is to be warmly received, other key findings present a more stark and sombre reality:

the unwelcome and continued presence of identity fraud, with no sign of any reduction, with over 102,500 cases identified in 2010,

a 4.73 per cent increase in the number of victims of impersonation to over 89,000, demonstrating that fraudsters increasingly target real people rather than use ‘fake’ identities,

a small drop in facility takeover fraud from the year before, masking the phenomenal increase of 250 per cent since 2007 with some 21,000 cases in 2010,

much fraud remains undetected during a period where lending levels have yet to match pre- recession levels.

Unknown truths

The 7pc reduction in the level of confirmed fraud recorded by CIFAS Members in 2010, when compared with the previous year, can be considered as good news. The fall in the level of fraud goes some way towards demonstrating the success of the preventative measures taken by businesses to foil fraudsters.

This decrease also raises very serious questions, however, namely:

* How much fraud is not being spotted (due – in part – to businesses’ stricter lending criteria meaning that some fraudulent applications are rejected outright before any fraud checks take place, thereby preventing attempted fraud from being identified)?
* Fraudsters – especially those involved in organised criminal networks – have long been recognised as exploiting new opportunities, so what avenues are they currently seeking out?
* Is this reduction short-lived? As spending cuts, tax increases and unemployment levels all take their toll, is a second wave of fraud about to be unleashed?

CIFAS Head of Communications Kate Beddington-Brown says: “While any decrease in the level of confirmed fraud is good news, how much other fraud is being attempted remains far from clear. Fraud levels rose during the recession and – as the UK continues to edge its way out of it – fraud appears to have gone down. It is far too early, however, to know the true extent of fraud as further economic challenges are yet to emerge and are sure to have an impact.”

Identity fraud

In 2010, over 102,500 cases of identity fraud (where fraudsters use false identities or impersonate victims) were recorded by CIFAS Members – a small increase from 2009. This means, however, that identity frauds comprise nearly 50pc of all frauds recorded by CIFAS Members in 2010! As a result, the danger and impact of this kind of fraud is clear – especially in light of the fact that 2009 witnessed a 32 per cent increase in this fraud type when compared with 2008.

More victims in 2010

Over 110,000 instances of victimisation were identified in 2010 (nearly 90,000 of whom are victims of impersonation – a 4.73pc increase from 2009 levels), underlining the very real human impact of fraud. Irrespective of how individuals became victims, these people suffer from the initial financial fall-out – as well as the time taken to rectify the damage and the impact upon their emotional well-being and sense of security.

Kate Beddington-Brown says: “Victimisation was previously seen as something that could be quite targeted, with fraudsters abusing a victim’s identity repeatedly. Sadly, the reality is that some fraudsters are now far more indiscriminate. Sceptics often claim that fraud is a victimless crime with little real impact but, in reality, fraud is theft – plain and simple. While it can be difficult to quantify the financial harm caused by fraud, when viewed in human terms, the damage becomes starkly clear to everyone. The British Crime Survey 2009-10 recorded over 75,000 robberies and muggings. The number of impersonations alone dwarfs this number and should convince anybody that fraud is very far from being a victimless crime. It is not and never will be.”


Previous figures from CIFAS have confirmed the intensification during previous years of facility takeover frauds (also known as ‘account takeover’ where a fraudster hijacks an individual’s account in order to ‘take over’ and control it). Between 2007 and 2009, facility takeover fraud rose by over 250pc. Therefore, a decrease of about 5pc in 2010 from the previous year must be viewed in context.

Kate Beddington-Brown says: “Whether it is organised criminals obtaining people’s account numbers through online criminal forums, or unauthorised use of someone’s bank card over the telephone, account takeover fraud is clearly not a passing trend. These figures show that account takeover is most definitely now a favoured method of obtaining funds fraudulently.”

CIFAS Chief Executive

Peter Hurst, CIFAS Chief Executive, says: “Fraudsters adapt their methods in response to changes in the economy, and technology – finding and exploiting any area of weakness that they can. As a result, these 2010 fraud figures must not be viewed in isolation. Any reduction in levels of fraud is good – but how much more remains concealed, only to be revealed during further changes in our economic climate, can only be estimated.

“The past few years have witnessed a real economic rollercoaster: from healthy lending figures, through to credit crunch and recession, a few signs of recovery and an uncertain future. This alone means that fraud figures must be viewed in context – and doing so reveals the real truth: that fraud rates have surged in recent years. This proves, if any further proof were needed, that the more organisations – both public and private – that work together to prevent fraud by sharing information with one another, rather than react to it, the greater the chance of lessening its impact.”

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