Dec
28
2012

2012: A year of Identity & Fraud, Part Two

Latest Thinking continues its look back over 2012 and some of the developments and events in the world of  Identity & Fraud.

In May, Experian revealed that Slough had overtaken London to become the identity fraud capital of the UK. The Berkshire town recorded 25 identity fraud attempts for every 10,000 households, with residents targeted at around four times the UK national average (seven households in every 10,000). Residents of London, Gravesend, Birmingham, Luton, Manchester and Leicester were also targeted at twice the national average rate. London as a whole experienced 22 attempts for every 10,000
households, although attempts were not spread evenly across the capital.

Substantial hotspots for identity fraud activity were found in and around London’s Olympic neighbourhoods. Financial service providers detected 78 incidents for every 10,000 households in East Ham, as residents were targeted at more than 11 times the national rate. Woolwich and Stratford also experienced significant identity fraud activity, recording 46 and 43 identity fraud attempts respectively for every 10,000 households.

Whilst the instances of fraud across all financial products remained at a constant level between 2010 and 2011 (six in every 10,000 applications were found to be fraudulent), the data shows that there was a surge in identity theft via current accounts and mortgages during this period, with rates doubling (from six to 14 in every 10,000 applications) and quadrupling (from one to four in every 10,000) respectively.

Identity fraud attempts on credit cards fell from 17 to four in every 10,000 applications.

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In June, Experian revealed that the financial services industry saw a 16 per cent quarter-on-quarter jump in fraud rates in the period January – March 2012, driven primarily by a significant surge in current account fraud. 19 in every 10,000 applications for financial services were found to be fraudulent in the first three months of 2012, up from 16 in the last quarter in 2011. 44 in every 10,000 current account applications were detected as being fraudulent during the first quarter of 2012, 23 per cent higher than Q4 2011.

The current account extended its position as the most targeted financial product, recording the busiest period for current account fraud ever recorded by Experian. Experian’s data shows that the majority (62 per cent) of current account fraud in 2011 was committed by first-party perpetrators, which typically involves an individual painting a knowingly false portrait of their personal circumstances to obtain services to which they are not entitled. 38 per cent of current account frauds
were due to individuals attempting to hide adverse credit histories when opening current accounts or applying for overdrafts.

A further 39 per cent of current account fraud involved product or payment abuse, which included people knowingly attempting to make payments with insufficient funds in their accounts. Attempted insurance fraud increased by 37 per cent quarter-on-quarter, to reach its highest point since late 2009. 13 in every 10,000 applications and claims were detected as being fraudulent during Q1, up from 10 in Q4 2011. 58 per cent of insurance fraud involved some form of product abuse, most significantly the provision of false payment information.

A 56 per cent increase in identity fraud attempts pushed credit card fraud up from 10 cases in every 10,000 applications in the final three months of 2011 to 14 in the first quarter of 2012. Attempted identity frauds on cards leapt from five to eight in every 10,000 applications over the same period.

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In July it was reported that fraudsters had traded 12 million pieces of personal information online in 2012, representing a threefold increase on corresponding figures for 2010. Experian data indicated that consumers had an average of 26 separate online logins, but just five different passwords across them all.

Experian advised people to change their passwords on a regular basis and try to make them more complex to keep fraudsters from cracking them.

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In August, a special investigation revealed that fraudsters were stealing identities in order to take out multiple mobile phone contracts and walk away with valuable handsets. One man returned from a holiday to discover fraudsters had taken out nine contracts in his name.

Experian said around 200 victims were contacting the company each month for help to restore credit histories that had been damaged by the “mobile communications fraud”.

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And click here to read Latest Thinking’s earlier post about ID & Fraud events in 2012, or check back again on Monday to read the concluding post.


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