Experian revealed that fraudulent applications for current accounts in the United Kingdom dropped sharply in 2012.
Current account fraud peaked in Q1 2012, with an estimated 19 of every 10,000 applications found to have a criminal element. Since then, through the end of 2012, the rate declined to an estimated 15 in every 10,000, dropping by approximately a quarter.
While current account fraud is falling, the overall rate of fraud at point of application across the UK’s financial services sector is inching higher, with a 3% increase in the past year. This is partly because of a rise in mortgage fraud for the sixth consecutive year, with a hike of 9% from 2011 to 2012. In addition to record mortgage fraud figures, this overall jump also was driven by growth in credit card and savings fraud.
Experian’s data shows that the majority (71%) of attempted current account fraud last year involved individuals misrepresenting their personal information on applications. Typically these first-party perpetrators involved someone trying to hide their adverse credit history when opening an account or applying for an overdraft. The remaining (29%) of account fraud attempts involved third-party identity fraudsters seeking to open accounts as a springboard to obtain other, more lucrative credit products, or for money laundering purposes.
Experian’s analysis of fraudulent applications revealed that fraud was highest amongst the Terraced Melting Pot group, which represents those in relatively urban occupations. The group was responsible for 21% of first-party fraud cases last year. Fraudulent applications also were high amongst the Liberal Opinion group, consisting of young, professional and well-educated people. This demographic accounted for 14% of all first-party fraud cases last year.
Nick Mothershaw, UK&I director of identity and fraud at Experian, said: "A decline in current account fraud is a positive step for the financial services industry as current account fraud is often the first step for fraudsters who later plan mortgage, loan or credit card deception. It is also important to highlight that the drop is very much the result of better systems and vigilance by financial services providers"
Experian predicts that fraudulent applications will rise throughout this year, driven by factors including the squeeze on household incomes and benefits, while stricter credit and lending criteria will drive more 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 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.