Nottingham, UK, 11 June 2012 — Experian®, the global information services company, today 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.
Nick Mothershaw, UK director of identity & fraud services at Experian, comments: “Experian’s data shows further growth in current account fraud during the first quarter of 2012, mostly emanating from individuals providing false information attempting to open new accounts or obtain overdrafts or making payments they knowingly couldn’t afford. The threat of identity fraudsters seeking to open accounts in the names of unsuspecting third parties, for money laundering or as a springboard to attempt fraud on more lucrative credit products, also remains.
“Credit cards have seen a resurgence in identity fraud, while a growing number of financially stressed individuals consider misrepresenting their personal or payment information when applying for insurance, contributing to a significant fraud upswing in the first quarter of 2012.”
Automotive finance
Fraud attempts in the automotive finance sector have declined significantly, down 34 per cent on the previous quarter. There were 18 attempted frauds in every 10,000 applications in the first quarter of 2012, the majority of which were individuals attempting to hide an adverse credit history when applying for automotive finance.
Loans
The number of fraudulent loan applications has continued to decrease, reaching the lowest point ever recorded by Experian. Four in every 10,000 applications were discovered to be fraudulent in Q1 2012, 38 per cent lower than the previous quarter. Attempting to hide an adverse credit history continues to be the preferred modus operandi in more than half of attempted loan fraud.
Mortgages
Attempted mortgage fraud fell by five per cent quarter-on-quarter, with 35 in every 10,000 applications uncovered as fraudulent during the first three months of 2012. Attempting to hide an adverse credit history, misrepresenting employment status and falsifying financial information were the most commonly used tactics employed by mortgage fraudsters during Q1.
Savings accounts
Savings account fraud rates were 18 per cent lower in the first quarter of this year than the preceding three months. 12 in every 10,000 applications were found to be fraudulent, with identity fraudsters responsible for more than 80 per cent of cases.
Experian’s Fraud Index is based on data derived from National Hunter and Insurance Hunter, the UK’s leading fraud prevention systems, operated by Experian on behalf of members. These systems enable financial institutions to cross-match applications against over 100 million previous application records in order to spot commonalities and anomalies that are potentially indicative of fraud for further investigation.
ENDS
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About Experian
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group 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.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com .