Fraud Fuelled by Economy Fears

Industry Association, CIFAS has released its latest figures, showing a dramatic increase in cases of application fraud and account takeover, prompting fears that financial services fraud is on the increase due to the recent economic slowdown.

Account Takeover Fraud
Account takeover increased in the first quarter of 2008, and this represents a massive 146% rise when compared to the same period in 2007. Experts believe this may be partly due to the growth of increasingly sophisticated phishing attacks.

Account Takeover allows a fraudster access and control over a victim’s existing account; most commonly their bank account or e-wallets; and the current trend shows that fraudsters are using the accounts to siphon money, rather than to create new fraudulent accounts, as was previously popular.

Role of Address Verification
Perhaps the biggest marker that fraud is increasing as a result of the economic climate is the rise in application fraud. This type of fraud usually involves falsifying or omitting details from applications in order to access a credit card, loan, insurance product or even a mortgage. CIFAS report that the most common perpetration of application fraud is the failure to disclose a previous address, perhaps because the applicant has a poor credit history record. Address verification, of both current and previous addresses is a simple procedure to implement as part of the anti fraud process, as 192.com customers will already be aware.

Changing Climate
The report seems to indicate that in a changing economic climate, trends in fraud are also susceptible to shift and reflect market uncertainty.

Peter Hurst, CIFAS Chief Executive concluded that: “In this changing landscape, these figures demonstrate very clearly the need for companies to find increased resources for their anti-fraud departments as the lack of credit available in the legitimate marketplace is already leading to an escalation in financial fraud.”

The full CIFAS report is available online here.

1st May 2008