Mortgage and savings fraud surges, according to Experian

news release

Mortgage and savings fraud surges, according to Experian

Mortgage fraud increases by 23 per cent year-on-year
Attempted savings account fraud more than doubles

Nottingham, UK, Wednesday 22nd August 2012 — Experian®, the global information services company, today revealed that the mortgage industry saw a 23 per cent jump in attempted fraud rates between April and June 2012. In the meantime, Experian’s latest Fraud Index shows that fraud fell by three per cent year-on-year across financial services products with automotive finance and insurance providers witnessing the biggest decreases during the period.

A total of 39 in every 10,000 mortgage applications were identified as fraudulent between April and June 2012, up from 32 in during the same period in 2011. Experian’s fraud analysis also revealed that the majority of attacks on mortgage products continue to come from first party fraudsters, individuals misrepresenting their own circumstances. Almost a quarter (24 per cent) of attempted mortgage fraud was due to individuals hiding adverse credit information and a further one in five (21 per cent) applicants providing misleading employment histories.

Savings accounts saw a 109 per cent uplift in fraud rates over during the period also. A total of 13 fraudulent applications in every 10,000 were detected, up from 6 in every 10,000 a year ago.  Third party identity fraudsters were responsible for the vast majority (88 per cent) of fraudulent activity in this sector. 11 in every 10,000 falsified savings account applications were down to unrelated third parties. This kind of identity fraud is often perpetrated for money laundering or sleeper fraud purposes.

Nick Mothershaw, Director of Identity & Fraud Services at Experian in the UK and Ireland, comments: “Over the course of the last year, we have seen mortgages continue to be targeted at a high rate, with more people trying to misrepresent their personal, employment and credit information on applications to get properties out of their reach. At the same time, we have also seen an increase in the number of properties where the use of the property is misdeclared, such as applying for a regular residential mortgage on a buy-to-let property.

“Meanwhile, deposit taking products – such as current and savings accounts – continue to be heavily targeted by third party identity fraudsters for money laundering purposes and as a sleeper platform from which to target more lucrative credit products.

“Robust fraud prevention relies on thorough and efficient validation of customers’ identities and the information presented on the application form. It is vital that finance providers share comprehensive and timely information about finance applications and known frauds to help combat this common threat to the industry.”

Fraud rates by financial product type

Fraud rates by financial product type

Automotive finance fraud
The automotive finance industry saw a decrease of 32 per cent in Q2. 16 in every 10,000 applications were discovered to be fraudulent, down from 24 in every 10,000 applications last year. Attempts at hiding adverse credit (64 per cent) were still the most common method when applying for automotive finance.

Insurance fraud
Attempted fraud fell by 16 per cent drop in the insurance sector. 10 in every 10,000 applications for insurance products were found to be fraudulent, down on the 12 in every 10,000 applications a year ago. 86 per cent of insurance fraud attempted between April and June was committed by first party fraudsters.

Credit card fraud
14 in every 10,000 credit card applications were discovered to be fraudulent in Q2, seen an increase of 22 per cent when compared to 12 in every 10,000 a year ago. While third-party fraudsters have historically been responsible for the majority of credit card fraud, Experian’s analysis has shown that increasing numbers of first party fraudsters have targeted this particular product over the last year. In Q2 just over half (53 per cent) of detected frauds targeting current accounts were perpetrated by first parties, which typically involved attempting to hide adverse credit histories in the application process.

Current account fraud
Attempted current account fraud increased by two per cent in Q2 and remains the most targeted financial product. 43 in every 10,000 applications were found to be fraudulent, up from 42 in every 10,000 in 2011 months ago. Over the last 12 months current account fraud has been driven primarily by first-party fraudsters, which have consistently been responsible for more than 70 per cent of attempts.

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 its 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.


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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.

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