NOTTINGHAM, U.K.—The overall fraud rate during Q1 2016 continued to grow reaching 54 in 10,000—compared to 45 in 10,000 during Q1 2015—spurred on by fraudsters focusing their efforts on current accounts and credit cards, a new report indicates.
The latest Fraud Index from Experian has also revealed an increase in ID theft within mortgage applications. Historically, third-party fraud has accounted for around 4% of all mortgage application fraud. During Q1 2016, the proportion of mortgage fraud committed by ID thieves increased to 6%, the highest since 2012, Experian stated.
“The increase from 4% to 6% is worrying,” said Experian fraud expert Nick Mothershaw. “This is because third-party mortgage fraud is very complex and not as easy to commit on a large scale as fraud related to other financial products, such as current accounts, can be. Because of the values involved, the impact on people’s lives can be devastating. In many cases, fraudsters have either hacked databases or intercepted emails between individuals and their solicitors. Large payments have been diverted and fraudsters have disappeared with the money.”
Mothershaw said Experian is also seeing an increase in impersonations of the deceased within mortgage fraud. Fraudsters use the ID of people who have recently passed away but who previously lived at a property.
Other Fraud Index highlights:
- Despite the increase in the ID theft in mortgage fraud, the Index revealed that overall mortgage fraud attempts dropped significantly during January, February and March this year, compared to the same period in 2015. Falling from 83 in every 10,000 applications in Q1 2015 to 66 in every 10,000 applications in Q1 2016, it represents the biggest quarterly fall seen by the mortgage industry in the last three years, Experian said.
- Current accounts continued to top the charts for fraudulent applications at a rate of 126 in every 10,000 applications, compared to 81 in 10,000 in Q1 2015.
- Credit card fraud took place at a rate of 46 in every 10,000 applications. This type of fraud has seen a steady increase in the past two years from the Q1 2014 figure of 33 in every 10,000 applications, Experian said.
- The balance of fraud remains tipped towards identity theft with 56% of all fraudulent activity in Q1 attributed to third-party fraud, with 44% classed as first-party fraud.
“Our latest fraud rate represents the amount of fraud that has been detected and prevented,” Mothershaw said. “Fraudsters are not going to stop looking for new and evolving ways to scam people. Fraud itself is viewed by many organizations as one of the biggest threats they are facing. Regardless of size, they are being targeted and the individuals that they service are bearing the brunt as much as the organizations themselves are. Everyone has a responsibility and a role to play when it comes to tackling fraud.”