Increase in fraud driven by account takeover and ID theft
The age of data-enabled fraud is here to stay, says CIFAS – the UK's Fraud Prevention Service.
During the first nine months of 2012 CIFAS members reported a 10 per cent increase in the overall level of confirmed fraud. This was driven by a 16.5 per cent increase in identity fraud, compared with the same period last year, and a 73 per cent surge in the takeover of accounts by criminals.
Two thirds (65 per cent) of all frauds now relate directly to the misuse of identity details. Nearly 115,000 fraud victims have been identified, with the number of victims of account takeover nearly doubling from 2011 levels.
The increase in levels of fraud reveals the seemingly ceaseless tide of fraud attacking UK organisations. Improved detection techniques, and increased fraud awareness, have undoubtedly helped to reveal more frauds that had previously escaped undetected.
The fact that this increase has been driven by just two specific types of fraud, identity fraud and account takeover, highlights the challenges facing organisations in the UK. CIFAS communications manager, Richard Hurley, said: “For individuals and businesses, data and information play a key, central role every day. The fact that it is this same data that fraudsters use more and more can only serve as a stark indicator that a significant review of how we all conduct business is overdue. Otherwise, we will effectively hand criminals the keys to our bank accounts and finances.”
ID crime now the main component of fraud in the UK
The importance of data to the fraudster is further underlined by the fact that, of the frauds recorded by CIFAS members during the first nine months of 2012, 65 per cent of them were identity frauds and account takeover frauds.
Hurley explained: “The simple fact is that, to commit these frauds, the criminals need personal details that they can use to impersonate someone or take over their accounts.
“These crimes therefore relate directly to the ‘identity’ of the victim – meaning that businesses must be aware that the threat currently causing the biggest, and most damaging, consequences for them is identity crime.
“Organisations must take this as a sign that they need to strengthen counter fraud measures in terms of validating that applicants, telephone callers and transactions are genuine, otherwise the scale of the problem will only grow.”
The human cost
Fraud is frequently thought of as a victimless crime, but as Hurley concludes, these figures must end that assumption: “There have been over 115,000 frauds with an identifiable victim recorded by CIFAS members during 2012 so far. This is nearly 30,000 more victims in 2012 to date than in the same period in 2011.
“For victims, the cost is not just financial: it is the time taken to sort the mess out and also the worry caused by not knowing how the fraudster managed to steal their details.
“These figures not only warn individuals to be careful, but they must also serve as an ultimatum to organisations that they have an obligation to review their security and verification processes and invest more in preventing fraud. Protecting their customers, after all, is the strongest form of customer service.”