Experian Reports Sharp Rise in UK Fraud Detections

The second half of 2013 was marked by a sharp rise in both detected and prevented fraud attempts in the UK as financial services providers push forward in the fight against credit application fraud, according to Experian.

The global information services group published its latest fraud index, showing that the overall level of detected and prevented fraud attempts in the UK rose by 18% last year across all credit products. In 2013, an average of 21 in every 10,000 applications for loans, credit cards, mortgages, savings accounts, current accounts and insurance were detected as fraudulent compared with an average of 18 in 10,000 fraudulent attempts in 2012.

The level of detected and prevented fraudulent applications for credit cards reached peak levels in the fourth quarter of 2013, with the three months of October to December recording the highest level of the past three years. During 2013, 25 in every 10,000 applications were found to be fraudulent compared to 15 in every 10,000 applications for the previous year.

In the insurance market, the number of insurance applications found to be fraudulent reached its highest recorded level in 2013, with 17 cases detected in every 10,000 applications against 12 in every 10,000 in 2012, a year-on-year rise of around 40%.

However, the number of current account applications found to be fraudulent fell by over 20%, from a peak of 36 in every 10,000 in 2012 down to 29 in every 10,000 applications. Efforts to combat mortgage fraud also saw some success, with the number of fraudulent applications detected dropping to 30 in every 10,000 in 2013 against 38 cases per 10,000 applications in 2012. Mortgage fraud fell to its lowest since 2010 in Q413, with 27 cases in every 10,000 applications detected during the final quarter.

Third party fraud, or identity theft, accounted for 37% of all fraud cases uncovered in the second half of 2013, up 2% on the previous period in 2012. The index also suggested that the industry continues to make headway in tackling first party fraud, with 63% of detected fraud cases accounting for first party fraud, similar to the same period the previous year (65%), as the industry invests in better fraud prevention systems.

“The financial services industry continues to make headway in the fight against fraud, with the amount of fraudulent cases being detected and prevented on the rise and in some sectors of the industry, such as insurance, at an all-time high,” said Nick Mothershaw, UK and Ireland director of identity and fraud at Experian. “However, lenders and consumers should remain vigilant. Although better systems are in place to combat fraud, identity theft still accounts for a high proportion of fraud cases detected showing that identity theft is rife.

“As our analysis suggests, fraud is still prominent in major service lines such as credit cards, current accounts and insurance, with credit card application fraud at its highest since 2010. Both providers and consumers can take steps to ensure risk is mitigated.

“Providers can invest further in the latest fraud prevention systems to protect against individuals misrepresenting their personal information, while also minimising third-party identity fraudsters seeking to open accounts to gain access to more profitable credit products.”

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