2013 Fraud Trends

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Fraud decrease serves as vindication and warning says CIFAS

The analysis of fraud trends during 2013 by CIFAS – the UK’s Fraud Prevention Service reveals a surprising mix of apparently good and equally alarming news about fraud.

Overall, fraud levels decreased in 2013 by 11% from the levels recorded in 2012 – the first year on year drop since 2010 – but fraud remains at a much higher rate than in pre-recessionary times. The decrease, however, is proof of the positive preventative impact of counter fraud measures such as data sharing. While there are some alarming fluctuations within the fraud figures, the most notable findings are:

Over 221,000 confirmed frauds were identified during 2013. While this is an 11% decrease from the previous few years, the level is still higher than fraud levels recorded in 2008 and 2010.
Identity crimes – where fraudsters use a person’s identity data to impersonate them (identity fraud) or hijack an individual’s existing account (facility takeover fraud) – still accounted for over 60% of all frauds.
Over 125,000 individual instances of an identifiable person becoming victim to fraud.
Some startling variations from 2012 have occurred in terms of the products targeted by fraudsters: frauds against mail order and bank accounts have experienced sizeable decreases, while loan and plastic card (e.g. store and credit cards) accounts have seen notable surges. Plastic cards are now the product most commonly targeted by fraudsters (up by 24% from the levels of 2012 and accounting for 30% of all confirmed fraud in 2013).

Explaining the decrease

The 11% decrease in fraud levels recorded during 2013 is undoubtedly good news: demonstrating how increased investments in fraud prevention systems such as data sharing have meant that participating organisations have lost less to fraud.

CIFAS Communications Manager, Richard Hurley, notes: “The decrease in fraud comes on the back of The Audit Commission’s Protecting the Public Purse 2013 which also reported a reduction in the number of frauds, and is good news for those who participate in the collective effort to prevent fraud. On the other hand, the fraud has not necessarily ceased to exist. Much comment has been made over the past year by senior police and business figures that fraud has increased. What this demonstrates, therefore, is that fraudsters have turned their attentions to targets that they deem to be more vulnerable: namely those who are not making best use of existing systems: meaning that public and private money is effectively being left unguarded for criminals to take.”

Identity crime: still the biggest problem

While identity crimes such as identity fraud or the hijacking of an existing account (where both rely on the criminal having the right data to circumvent security and identity processes) fell during 2013, they still represented over 60% of all fraud recorded during 2013, with well over 125,000 individual victims of fraud identified.

Richard Hurley states: “This is the third year that identity crimes have accounted for such a huge chunk of fraud in the UK. Sadly, it also confirms that still not enough is being done by individuals and organisations. Consumers have the right to demand that organisations handle their data securely, and increase their anti fraud efforts and stop fraud before someone financially loses out. But collectively, every one of us has to be expected to take responsibility to do all that we can to keep ourselves safe. Disabling firewalls, not installing anti-virus software, using good online practice and strong passwords: these have long been messages that CIFAS and others have delivered. This is why our guide Protecting Your Online Information has been released to support the Home Office’s Cyber Street campaign. The figures, however, indicates that there is still much to do!”

Changing times, changing targets

As CIFAS has long commented, changes in annual patterns of fraud occur each year: 2013, however, was notable. While bank accounts are the most commonly targeted product, levels of fraud have reduced when compared with 2012. Similarly, mail order account providers have reaped the benefit of enhancing their security procedures by seeing much less fraud in 2013. Fraud targeting credit or store cards (up 24%) and loan accounts (up 55% – this included secured, unsecured and payday loans) both increased: demonstrating that beneath the apparent overall decrease, it is far from being all good news as fraudsters ramped up their efforts different targets.

Comment from the CIFAS Chief Executive

CIFAS Chief Executive, Simon Dukes, concludes: “The fact that recorded fraud has gone down is great news, but this is no cause for complacency. Fraudsters have turned their attention to organisations who are not making best use of existing solutions, and will continue to look for new products or channels and opportunities to attack once again. In 2010, CIFAS saw a similar reduction in fraud: and warned that this could just be the calm before the storm. What followed was two years of unprecedented surges. The figures for 2013 contain many variations and – therefore – similar caution must be exercised; as fraudsters will not have disappeared completely, but will have sought out new targets.”

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