The overall level of fraud increased by 9 per cent during 2009, according to CIFAS - The UK's Fraud Prevention Service.
There were 234,253 fraud case identified in 2009 and the rise has been driven by three main factors: identity fraud is up by almost one third; a 55 per cent increase in false insurance claims; and the relentless rise in facility takeover and misuse of facility frauds, rising by 16 per cent and 28 per cent respectively.
Identity fraud
This rise in identity fraud has a direct link to the recession. Fraudsters have seen the reduction in the overall amount of lending taking place during 2009, discouraging many from attempting to commit application fraud, for example, the use of lies and forged documents in an attempt to obtain products or services.
This has led to a 25 per cent reduction in application fraud but has meant that fraudsters have returned to stealing the identities of others in order to gain products and services.
Protective Registration (a service provided by CIFAS to help protect individuals from identity fraud) increased by 241 per cent year-on-year. This is due to both to a developing awareness among individuals of the threat of identity fraud, and to the growing use of the service by organisations to protect the identities of those whose details have been put at risk as a result of a data breach.
In 2009, CIFAS recorded more than 85,000 victims of impersonation and 24,000 victims of takeover fraud (whose accounts have been hijacked by fraudsters). This represents increases of 35 per cent and 16 per cent respectively on 2008 and an overall increase in victims of 31 per cent.
CIFAS communications manager, Richard Hurley, commented: "The financial cost of fraud is bad enough, but the emotional and psychological effects for the victim must never be underestimated.
“Fraudsters are adapting their approach in an attempt to ensure that their profits do not suffer during the recession, with absolutely no thought for the profoundly damaging impact this has on their victims."
Rise in premeditated ‘accidents' in insurance fraud
While insurance fraud has long been difficult to prove (for instance, adding to claims for stolen cars or laptops other items such as mp3 players, mobile phones, cameras and wallets), the 55 per cent increase in cases filed by CIFAS Members during 2009 reveals a trend towards claimants being even more dishonest. This has been driven more by a surge in claims for staged or completely fictitious events than inflated claims for damage and losses actually incurred.
Facility takeover fraud and misuse of facility
Previous figures from CIFAS have confirmed the intensification during the past two 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) and misuse of facility frauds (where the fraudster uses an account, policy or other facility for a fraudulent purpose such as receiving fraudulent payments into a bank account, or evading payments on credit card or loan accounts).
In 2009, facility takeover fraud rose by 16 per cent from 2008. This means an increase of over 250 per cent during the past 24 months. A significant contributory factor to this trend is the prevalence of ‘phishing' emails (sent by fraudsters to look as though they come from a bank or credit card company, for example, asking for personal details which are then used to plunder the victim's account).
Similarly, misuse of facility has risen by 28 per cent in 2009 and by 115 per cent during the last two years.
The link between these types of fraud runs deep, with fraudsters frequently using both methods: for example, taking over an account to withdraw funds and then using another account to receive these bogus ‘transactions'.
Peter Hurst, CIFAS chief executive, commented: "It is well-known that a rise in fraud goes hand in hand with a recession. The trends identified by CIFAS members during 2009, however, demonstrate that it is not just a few thousand extra people turning to crime to make ends meet. It is a whole criminal element changing its behaviour. Fraudsters adapt their methods in response to changes in the economy, finding and exploiting any area of weakness.
"All organisations must acknowledge this by arming themselves against the fraudsters. As these figures demonstrate, fraud is very much a present danger - no matter what the circumstances. Working together, sharing data on proven frauds and sharing best practice are the only ways that fraud can be prevented - and it is not only the pragmatic thing to do, but also the responsible thing to do in times of continued economic strife."
Date: 2nd, February, 2010
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