News release


Chantal Heckford / Jennifer Comerford / Duncan Skehens
Lansons Communications
020 7490 8828 / /

Automotive finance and insurance fraud leap in third quarter
Identity fraudsters return to the UK market over the summer months

Nottingham, UK, 23 November 2009 – Experian®, the global information services company, today launched the first Experian Fraud Index, a new quarterly data update highlighting the evolving nature of the fraud threat facing the UK’s financial services sector.

Experian provides industry-leading fraud-prevention tools that organisations in the financial services sector use to identify and minimise their exposure to fraud. In the UK, nine of the top 10 banks, nine of the top 13 mortgage providers and eight of the top 10 credit card companies, as well as 18 building societies and 23 insurers, use Experian as their preferred supplier of application fraud prevention tools.

Fraud rates by financial product type

According to data derived from National Hunter and Insurance Hunter - fraud prevention databases operated by Experian on behalf of their members - approximately 16 in every 10,000 applications received by automotive finance, credit card, insurance, loan and mortgage providers in Q3 2009 were identified as fraudulent. This was 3.5% percent more than in the same period in 2008, and 3.6% percent more than in Q2 2009.

Insurers and automotive finance providers saw significantly greater proportions of fraud attempted against them during Q3. Nine in every 10,000 insurance applications were found to be fraudulent, up from seven in every 10,000 in Q2. Q3 levels of insurance fraud were, however, similar to those detected during Q3 2008.

Following two quarters in which the scrappage scheme attracted significantly more ‘honest buyers’ to the new car market, the proportion of frauds attempted against automotive providers increased by 14.5% between Q2 and Q3. Almost 27 in every 10,000 applications were found to be fraudulent in Q3, up from 25 in every 10,000 during Q2. However, this was markedly lower than Q3 2008 when almost 32 frauds were detected in every 10,000 applications.

The percentage of mortgage fraud also continues to increase. Following three quarters when around 30 in every 10,000 applications were discovered to be fraudulent, the number attempted in Q3 2009 declined to 25 in every 10,000. This was still, however, significantly more than the 16 in every 10,000 identified in pre-crunch Q3 2006.

Levels of fraud for credit cards were similar to Q2, with around 25 in every 10,000 applications detected as fraudulent. Loans fraud continued to decline, to five in every 10,000 applications.

Detected fraud rates by product type[1]

Source: Experian, National Hunter and Insurance Hunter

Return of identity theft
Experian analysis also reveals that in Q2 and Q3 2009, cases of third party fraud – identity theft – accounted for 69.9% and 68.5% of all frauds detected respectively, up from 60.4% in Q1. With total fraud rates increasing quarter-on-quarter in both Q2 and Q3, against a greater volume of applications, this demonstrates that ID fraudsters have become increasingly active in the UK during 2009.

Nick Mothershaw, Director of Fraud & Identity Solutions at Experian, comments: “The fraud threat posed in the current economic climate is very real. Experian’s new Fraud Index clearly demonstrates that fraud poses an increasing risk to the UK’s financial services sector and that the nature of the risk is continually evolving. As fraud becomes more sophisticated, so must fraud defences. Financial institutions must continue to be vigilant at the point of application, but also continually reassess fraud risk across existing accounts.

“Automotive finance fraud, which can yield a high value asset that is easily converted into cash, is a fraud growth area. The complex sales process involving dealers and third party finance providers means that fraudsters consider the automotive market to be an easier target than the retail banks.

“While the organised criminal element is active in the insurance fraud space, much of the increase here is down to individuals making fraudulent claims or lying to try and get cheaper insurance.

“Mortgage fraud has seen a substantial increase as a shortage of sub-prime and self-certification mortgages has led to many more people omitting addresses on their applications in an attempt to hide adverse credit history, or – in the case of some self-employed people – to lie about their employment status.”

Experian has an un-matched view of how fraudsters are impacting on financial institutions. Experian operates the UK’s two leading fraud prevention systems, Hunter and Detect, providing the biggest ever UK application universe against which frauds can be detected. This enables lenders to cross-match applications against in excess of 500 million records in Experian’s consumer database, as well as over 100 million previous application records, in order to spot commonalities and anomalies that are potentially indicative of fraud for further investigation.


About Experian

Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.

Combining its unique information tools and deep understanding of individuals, markets and economies, Experian partners with organisations around the world to establish and strengthen customer relationships and provide their businesses with competitive advantage.

For consumers, Experian delivers critical information that enables them to make financial and purchasing decisions with greater control and confidence. Clients include organisations from financial services, retail and catalogue, telecommunications, utilities, media, insurance, automotive, leisure, e-commerce, manufacturing, property and government sectors.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index.  Experian has corporate headquarters in Dublin, Ireland and has operational headquarters in Costa Mesa, California and Nottingham, UK.  The Group employs approximately 15,000 people in 40 countries worldwide, supporting clients in over 65 countries around the world. Total Group revenue for the year ended 31 March 2009 was $3.9bn.

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[1] Fraud rate shows the amount of fraudulent applications detected at or within 90 days of the point of application as a percentage of total applications. Experian did not specifically record the total number of applications for credit cards only through National Hunter prior to Q2 2009, and has therefore derived a ‘total application’ level for credit cards based on trends from applications for credit cards, current accounts and savings accounts combined to allow fraud rate comparisons to be made before this point.