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Facility or account takeover makes up 65% of all ID fraud

Identity theft soared during 2012, accounting for half of all financial fraud in the UK. This drove the level of account takeover frauds up by 53% during the year, according to CIFAS, the UK Fraud Prevention Service.

Overall, fraud was up 5%, a slowdown from the 9% growth recorded in 2011. The 250,000 confirmed frauds identified during 2012 by CIFAS Members is the highest number ever recorded. More than 150,000 cases had an identifiable victim.

The fraudulent use of identity details (both fictitious and real) is “the biggest and most perturbing fraud threat”, says CIFAS.

Facility or account takeover, where a fraudster gains access to and hijacks the running of an account, rocketed by 53%, and now accounts for 65% of all identity related fraud. The combined number of real victims of both types of fraud has also risen by 24% from the levels in 2011.

Kate Beddington-Brown, CIFAS head of communications, said: “These increases serve as a warning and a challenge to organisations and consumers equally. Organisations have invested heavily in updating and refreshing their security processes recently, ensuring that extra steps are taken to validate the identity of people with whom they are dealing. In spite of this, however, identity crimes have continued to rise – demonstrating that far more must be done. Equally, for individuals, it is obvious that fraud relating to personal data is an immense criminal trade so, fundamentally, we all have to do all we can to ensure that we also protect ourselves from becoming a victim, as well as demanding that the organisations we deal with take their security responsibilities seriously.”

On the other hand, frauds committed by the genuine account holder or applicant have all declined: the most notable being the decrease in fraudulent misuse of an account which fell in 2012 by over 15% from the record levels seen in 2011. There has also been a fall in proven false insurance claims and instances of individuals submitting false details or documents in support of an application.

CIFAS says that a “substantial proportion” of these frauds still bear the hallmarks of ‘money mule’ activity where a criminal recruits someone to use their account on the fraudster’s behalf.

“With the cost of living increasing, pay levels frozen for many, benefit changes taking effect and a sluggish economy, it is unsurprising that fraud has increased,” said Peter Hurst, CIFAS chief executive. “Prevention remains better than cure, however, and it is time for all organisations and consumers to start reviewing their approaches to preventing fraud rather than just dealing with its effects. Investment in proper fraud prevention systems and approaches, from online security to data sharing, and education are the cornerstones of such an approach and – without them – the only thing that is guaranteed is an ever increasing fraud losses to organisations and society at large.”