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Crime Survey - Fraud stats and tips PDF Print E-mail
Thursday, 21 July 2016
Nick Mothershaw, ID and fraud expert at Experian, said: "While there are Government initiatives underway to tackle fraud, it’s largely down to organisations to take care of themselves and the people they service. There are significant differences in the size of loss and quality of fraud management across business sectors.

"Resilience to fraud can only be tackled from the grass-roots up, so it’s up to each organisation to not only manage fraud as a loss factor, but to overcome it by treating fraud prevention as a growth opportunity.

"he growth of the Internet of Things makes the development of improved fraud prevention systems hugely important as, unfortunately, fraudsters remain innovative and people need to be vigilant in the protection of their Identity.

"The shift to consumer-centric digital identities, where a person re-uses a single, strongly verified digital identity to access many different online services, will help combat ID theft. However, it will also undoubtedly only introduce new types of fraud attack that we must be prepared to defend against."

Business data
Data taken from the Annual Fraud Indicator 2016, published May 2016.
· Overall, fraud could be costing the UK economy up to £193 billion a year
· Procurement fraud is estimated to be £127 billion – or 4.78% - of the £2.7 trillion of total expenditure
· Phishing attacks rose by more than a fifth (21%) last year and were estimated to cost Britain more than £280 million
· The insurance industry identifies record-high of £3.6 million of fraud every day
· Payroll fraud accounts for losses of £12 billion per year, eight per cent of the total cost of fraud to the private sector
· The charity sector is hit with fraud costs of nearly £2 billion per year
· Mortgage lending suffers losses equivalent to £1.3 billion annually – 84 applications out of every 10,000 are suspected to be fraudulent
· Insurance sector fraud, costs £1.3bn a year through illegitimate claims – with an estimated 350 frauds every day
· Fraud against UK citizens is estimated at £9.7 billion per year, which is a relatively modest 1.2 per cent of the £831 billion annual family expenditure

Top considerations for businesses

Soft targets often hit the hardest
There are now more places for criminals to commit fraud i.e. numerous websites, aggregators, retail outlets…etc. At the same time, millions of daily transactions are now completed through channels, such as mobile or social media platforms. Businesses have to strike the right balance between giving customers a smooth service against a backdrop of up-to-date fraud detection and prevention measures, especially at their busiest times. As a result, some may be inclined to take risks and accept lower levels of due-diligence instead of completing more comprehensive fraud data checking, verification and authentication processes. Criminals know this.

Customer fraud
This is when someone poses as a customer, supplier or contractor and false information is deliberately supplied with the specific intention of defrauding a business for personal or commercial gain. It can be spotted and blocked simply by screening and checking their details against a broad range of data available to confirm given details, flag up any anomalies and known fraud information.

ID theft and misrepresentation
A fraudster will send new or updated, legitimate-looking payment details to the accounts payable team on a bogus letterhead, all under the guise of an approved or regular supplier or contractor. Consider adopting a fast, online anomaly-checking system that matches applicants and customers’ details against a variety of databases, including any credit bureau information. Also consider sharing any information that emerges with anti-fraud bodies. It’s good business practice, helps protect suppliers, legitimate customers and reputations.

Account takeover
It’s simply an alternative form of ID theft and occurs when account information is stolen, for example through computer hacking or interception of a credit card, and used with the genuine owner’s knowledge. Businesses should ensure IT systems are protected and sensitive data secured with security policies fully understood and implemented by all personnel. It’s worth conducting periodic and systematic screening of existing accounts. By comparing information against an array of data sources makes it far easier to identify potentially fraudulent and suspicious activity.

Sleeper fraud
A sleeper starts out slowly, develops a good relationship and builds up a substantial credit line, before disappearing with a sizeable haul that they have no intention of paying for. Again, the fraudster may simply look like a legitimate customer, supplier or contractor who has created a fake company. Although there may not be much available information about the business, the individuals behind it can be screened and could be red-flagged or deemed as suspicious. Developing insight into genuine customer behaviour will ensure businesses are well placed to gauge or act on any unusual activity which may also indicate fraudulent behaviour. It is always worth screening new customers and comparing them against as broad a range of information as possible. It may be that a customer has a track record of failing to pay, or disappearing with significant sums, or unpaid-for goods.

Insider Fraud
In many ways among the most insidious forms of fraud, it usually emerges when an employee, agent or trusted adviser deliberately uses or passes on confidential information, with the specific intention of cheating an organisation. It can be tackled by running background and financial checks on all new starters and if necessary, be prepared to regularly check information on existing employees including their on-going financial health and any recent criminal convictions.

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