Our analysis of latest fraud statistics highlights the marked increase in detected third-party application fraud since August 2013, specifically accounting for cases in which a victim’s identity has been stolen.
As a result, the proportion of detected third-party fraud compared to consumer – or first-party fraud – has now shifted. Latest fraud statistics indicate that during the 2014, third-party fraud was found to be most prevalent across card, savings and loan applications. The general move to third-party fraud is in line with a return to pre-recession behaviour.
As ID theft continues to rise, first-party fraud has fallen away. During the past 12 months, first-party fraud was found to be most prevalent across mortgage and automotive finance applications. Despite an increase in the proportion of detected third-party fraud within the past year, the overall rate of detected fraud remained at a relatively consistent level during the first-half of 2014. Across all financial services products during H1-2014, fraud rates on average were recorded at around 40 out of every 10,000 applications. The rate peaked in March 2014, when 43 out of every 10,000 applications were detected as fraudulent, but by the end of H1-2014, it stood at around 36 out of every 10,000 applications. Clearly it’s not all bad news. More fraud is being spotted thanks to the vigilance, diligence and determination of the financial services sector.
But are other external factors are also now coming into play?
It’s now around 18 months on since the formal launch of seven-day current account, helping prompt more than 1.2 million switches within a year. At the same time, there are concerns that the Mortgage Market Review (MMR), with its stricter affordability tests, has created an unnecessary barrier for some wishing to switch their mortgages and is prompting some to try to falsify earnings or job status.
Elsewhere, more scrutiny is being put into due-diligence and back-office procedures surrounding anti-money laundering initiatives (AML), institutions’ efforts around identity verification and stronger Know Your Customer (KYC) programmes.
For more information and the latest fraud statistics, download our latest Fraud report.