The latest fraud data shows a significant rise in the detection of identity theft as a proportion of all frauds. Third party fraud - whereby a victim’s identity has been stolen by a third party – now accounts for 47 per cent of all fraud cases detected and prevented during the last year and has risen from 30 per cent of all detected frauds in 2013.
Third party fraud was found to be most prevalent in applications for cards, savings and loans products whereas first party fraud – fraud committed against a financial institution by one of its own customers, was found to be most prevalent across mortgage and automotive finance applications.
Nick Mothershaw, UK&I Director of Identity & Fraud at Experian, comments:
“Our latest analysis shows the financial services industry is making continued and significant progress in the fight against fraud, and suggests financial services providers are investing in fraud detection and prevention measures in order to better protect customers from identity thieves. The significant increase in detected and prevented third party fraud in particular shows how far providers have come in becoming wiser to the tricks of identity thieves, although recent high profile instances of data theft show that there is still much to be done.”
Experian’s analysis reveals that the rate of detected fraud across financial services products has also increased year-on-year.
Overall, mortgage applications were the highest ranked product in terms of rate of detected fraud. In August 2013, 82 out of every 10,000 mortgage applications were found to be fraudulent, compared to 79 out of every 10,000 applications in August 2014 – highlighting that the number of detected fraudulent mortgage applications has remained fairly consistent as a targeted product.
Of those applications uncovered to be fraudulent in August 2014, 96 per cent were classed as first party fraud (i.e. applications made by the genuine customer) – making mortgages the sector where first party fraud is most prevalent.
In August 2014, 16 in every 10,000 applications were found to be fraudulent, compared to 7 in every 10,000 applications in August 2013, a notable rise of 129 per cent in detected fraud.
Loans proved to be a primary target for identity thieves, with 78 per cent of applications uncovered to be third party fraud attempts, compared to 61 per cent detected as third party fraud the year before (August 2013).
Nick Mothershaw, UK&I Director of Identity & Fraud at Experian concludes:
“The level of detected fraud across financial products suggests that the threat of fraud remains as prevalent today as ever, if not more so. Investing in the latest fraud prevention systems remains of paramount importance for providers to protect against first party misrepresentation and the tactics of identity thieves. As people spread their financial products across a wider range of digital platforms, they must also remain vigilant to ensure their personal details remain out of the clutches of identity thieves.”
