The analysis of fraud trends during 2011 by CIFAS – the UK's Fraud Prevention Service – reveals a disturbing 9% increase in the overall level of fraud, when compared with the previous year, with further key findings presenting a stark picture of the economic crime landscape in the UK.

Highlights are:
 
• Over 236,500 frauds were identified during 2011 by CIFAS members, the highest number of frauds ever recorded by CIFAS members and over 120,000 individual cases with an identifiable victim.
• The continued blight of identity fraud accounts for over 113,000 fraud cases (a 10% increase from 2010 levels and representing 48% of all frauds).
• An 18% surge in facility takeover fraud (where a fraudster gains access and fraudulently uses a victim’s account such as a credit card, bank account or mobile phone), meaning that this type of fraud has rocketed by nearly 300% in just five years.
• A 13% rise in misuse of facility fraud (where an account, policy or other facility has been legitimately obtained but is later used fraudulently).

The 9% increase in fraud levels recorded during 2011 is a depressing enough reminder of the economic trials currently facing UK businesses and consumers. However, with over 236,500 frauds confirmed in 2011, a larger number than any previous year, this confirms that as austerity bites, economic crime continues to be a stealthy, insidious danger.

CIFAS communications manager, Richard Hurley, said: “It is vitally important to remember that fraud and economic crime are offences with a range of motivations. Many of these frauds will undoubtedly be committed by organised criminal elements, but many will also be committed by people who seemingly feel that their circumstances leave them no choice. Equally, financial desperation leaves many susceptible to potential scammers. Untangling the mess that fraud causes, irrespective of motivation, however, is time-consuming, damaging and costly to businesses, to the public sector and to individuals. Rather than being the ‘victimless crime’ it is sometimes heralded as, fraud actually makes victims of us all.”

Personal data
The fraudulent use of identity details (either those of an innocent victim or completely fictitious ones) continues to be the biggest and most perturbing fraud threat. Nearly half of all frauds identified during 2011 relate to the impersonation of an innocent victim or the use of completely false identities.

This picture becomes more disturbing when viewed in conjunction with facility takeover fraud: where the fraudster gains access to another person’s account details and takes over the account. This type of fraud increased by 18% during 2011, which means that the two data driven frauds (identity fraud and account takeover combined) now account for over 58% of all frauds identified. Furthermore, the number of victims of both types of fraud has – when combined – risen by 10% from the levels in 2010; underlining the very real cost of these crimes. Hurley noted: “The value of personal data to fraudsters has never been questioned, but the continued increases in the levels of identity fraud and account takeover warn us all that not enough is done to combat fraudsters.”

Misuse of accounts 
One of the most disconcerting fraud types, however, remains misuse of facility fraud: a legitimately obtained account is used fraudulently (such as to receive stolen funds, or evade payment of monies owed). CIFAS has previously highlighted that a substantial proportion of such frauds bear the hallmarks of ‘money mule’ activity (where a fraudster recruits another – often innocent – party to use his or her account to launder money on the fraudster’s behalf), demonstrating that organised criminals now have a three-pronged attack on their victims’ identities: impersonating them, hijacking their accounts, or tricking them into using their own details as a shield for criminal activity. Equally true, however, is that financial insecurity and the economic pinch will have been motivating factors for many of these frauds. Hurley noted: “As if other frauds were not enough evidence of the economic distress, misuse of account has risen by 13% – representing more than 1 in 5 of all frauds recorded last year.”

CIFAS chief executive, Peter Hurst, concluded: “With the cost of living increasing, pay levels frozen for many, and tax and VAT changes taking effect, perhaps it is unsurprising that fraud has rocketed again. Prevention, however, remains better than cure, and it is time for all organisations and consumers to start reviewing their approaches to preventing fraud rather than trying and failing to recover losses. Not investing in proper fraud prevention systems and approaches, from online security to data sharing, is tantamount to leaving an open till unguarded. It is the same whether you are a private sector organisation, a public sector body or a charity. It will lead to only one thing: financial loss.”

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