First-party fraudsters target credit card firms
By UK CreditCards.com
Credit card companies are on the alert after a report revealed that fraud rates against financial services providers rose by 11% last year. There has been a marked increase in fraudulent applications, say researchers, both by identify thieves and by people lying about their financial circumstances to increase their chances of getting credit.
rates up 11%
The latest report from global information services company Experian shows that the number of frauds attempted against financial services providers increased by 11% in 2010. Overall, 20 out of every 10,000 applications for credit or other financial products were found to be fraudulent, up from 18 the previous year.
According to Experian, 2010 saw a significant increase in fraudulent applications for current accounts, as well as growth in the number of identity frauds targeting personal loans. Meanwhile, fraudulent attempts to obtain new credit cards increased by 4% to account for 19 out of every 10,000 applications, after falling every year since 2006.
fuels first-party fraud boom
Experian found that more than half of frauds attempted against financial services providers are now cases of first-party fraud, in which a person lies about their personal circumstances during their application to increase their chances of success. Overall, 56% of all detected frauds last year involved first-party fraud, compared with just 39% in 2009. Experts believe that this has been fuelled by lower earnings, wage freezes and unemployment in the aftermath of the recession.
Those most likely to commit first-party fraud are young single people living on limited incomes and living in small flats that are rented from councils or housing associations. According to Experian, people in this group were four times more likely to attempt first-party fraud than the UK average, and typically targeted automotive finance, credit cards and personal loans. Credit cards and loans were also targeted by many young professional individuals with university qualifications.
Nick Mothershaw, director of identity and fraud at Experian, says that fraud is on the increase in the UK, with innovative fraudsters "targeting any perceived weaknesses in the system."
"Fuelled by the recession's aftermath, it is likely that financial services providers could see fraud attempts rise during 2011," warns Mr Mothershaw.
Published: 14 April 2011
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