Identity fraud attempts double in first half of 2011, Experian data shows
- Experian predicts nine per cent increase in application fraud attempts during 2011
- Current account fraud continues to grow rapidly, now the most attempted financial fraud
- Insurance fraud increases by 51 per cent year-on-year
Nottingham, 17 October 2011 — The latest Fraud Index from Experian®, the global information services company, has revealed that identity fraud attempts doubled in the first half of 2011, compared to Q4 in 2010. This pushed up the overall level of application fraud attempted against UK financial services firms for the third successive quarter.
The analysis, published at Experian’s annual Identity & Fraud Forum, reveals that identity fraudsters were responsible for eight in every 10,000 applications made in Q2 2011 (April – June 2011), double the number of fraudulent applications recorded in the final quarter of 2010. This was driven by a 340 per cent increase in current account identity fraud, from five to 22 in every 10,000 applications.
Experian’s analysis also highlights that 18 in every 10,000 applications for automotive finance, credit cards, insurance, loans, mortgages, current accounts and savings products made in the second quarter of 2011 were found to be fraudulent. These were five per cent higher than January to March 2011, and up nine per cent on the year.
Over the same period the number of first-party fraud attempts – where a genuine individual misrepresents their circumstances – remained constant at 10 in every 10,000 applications.
42 in every 10,000 applications for current accounts were detected as fraudulent between April and June 2011, up 20 per cent on the first three months of 2011 and 59 per cent higher than during Q2 2010. For the second quarter in a row, current accounts were the most targeted financial product by fraudsters.
Experian’s Fraud Index collects data from both the National Hunter and Insurance Hunter fraud prevention systems, which are managed by Experian on behalf of its clients. Both systems provide a way for financial organisations to protect against fraud by comparing applications with previously submitted ones and pinpointing inconsistencies. This allows companies to immediately flag potentially fraudulent applications for further review.
Nick Mothershaw, Director of Identity & Fraud at Experian UK & Ireland, comments: “Identity fraud is back with a vengeance. Our analysis shows that we are witnessing a surge in the number of detected identity frauds, with current accounts the number one target in the UK. Fraudsters see the current account as an easier option, giving them a springboard for money laundering and from where they can also target more lucrative credit products such as mortgages, credit cards and loans.”
“Our latest figures suggest that, across the financial services industry, application fraud will increase by at least nine per cent this year.”
Fraud rates by financial product type
Automotive finance experienced a decrease in attempted fraud for the fourth quarter in a row in Q2 2011, declining by 12 per cent on Q1 2011, and 49 per cent year-on-year. Fraud attempts on this sector now stand at 24 in every 10,000 applications. Based on fraud rates in the first half of the year, Experian predicts automotive fraud rates will fall by more than 30 per cent this year.
Credit card fraud increased by three per cent for the second successive quarter. 12 in every 10,000 applications for credit cards were found to be fraudulent in the second quarter of 2011, although this was significantly lower (down 36 per cent) year-on-year. Experian predicts that the level of card fraud might fall by as much as 40 per cent in 2011.
The insurance sector has seen fraud attempts remain at 12 in every 10,000 applications for the second successive quarter in the period April – June 2011. This was, however, a 51 per cent increase on the same period in 2010. Experian's data suggests that the insurance industry might see insurance fraud increase by more than 30 per cent in 2011.
Loan fraud has continued to decrease and is now the least targeted credit facility of the financial products Experian analyses, with only six in every 10,000 applications found to be fraudulent. Compared to Q1 2011, this is a drop of 10 per cent, and 15 per cent on the same period last year. Experian believes that loan fraud rates will be six per cent lower in 2011 than they were last year.
Mortgage fraud has decreased for the first time since Q3 2010, down five per cent on the previous quarter and nine per cent over the year. The rate of attempted fraud now stands at 32 per 10,000 applications, placing it lower on the scale than current account fraud, which overtook it as the most targeted financial product for the first time in Q1 this year. Experian predicts that mortgage fraud attempts will increase by three per cent in 2011 as a whole.
Savings account fraud has increased slightly on the previous quarter (up four per cent), but is down by 64 per cent year-on-year. This corresponds to the increase in fraud attempts on current accounts as fraud rings often use these easier targets as a way to gain access to more lucrative services. Experian anticipates a 40 per cent fall in savings fraud attacks during 2011 as a whole.