Fraud attempts on the rise in financial services sector

Recently released figures from Experian have revealed a sharp rise in the number of detected and prevented fraud attempts for financial services products in the second half of 2013.

According to Experian’s latest Fraud Index, the overall level of detected and prevented fraud attempts rose by 18% in 2013 across all credit products.

In 2013, an average of 21 in every 10,000 applications for loans, credit cards, mortgages, savings accounts, current accounts and insurance were detected as fraudulent compared with an average of 18 in 10,000 fraudulent attempts in 2012.

Other highlights from the report include:

• Third party fraud (identity theft) accounts for over a third (37%) of all fraud cases uncovered in the last six months of 2013, up 2% on the previous period in 2012. 
• Fraudulent loan applications continue to account for the fewest detected number of fraud cases across financial services, with just six in every 10,000 applications discovered to be fraudulent in 2013. This was similar to levels during the same period the previous year, with five detected cases in every 10,000 in 2012. Identity theft now accounts for almost two thirds (63%) of all the detected loan fraud cases, with falsification of a current address the main grounds for attempted fraud.
• The automotive finance industry saw the number of known fraud cases in 2013 remain similar to the previous year, with 20 cases in every 10,000 applications compared to 17 in cases in every 10,000 in 2012. Hiding adverse credit was found to be the most common type of fraudulent behaviour.
• Savings account fraud saw the number of known fraud cases in 2013 remain stable compared with the previous year, with 12 cases in every 10,000 applications compared to 12 in cases in every 10,000 in 2012. The vast majority of fraud was committed via ID theft (44%).

“The financial services industry continues to make headway in the fight against fraud, with the amount of fraudulent cases being detected and prevented on the rise and in some sectors of the industry, such as insurance, at an all-time high,” commented Nick Mothershaw, UK&I director of identity & fraud at Experian.

“However, lenders and consumers should remain vigilant. Although better systems are in place to combat fraud, identity theft still accounts for a high proportion of fraud cases detected showing that identity theft is rife,” he added.

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