While this news is to be warmly received, according to CIFAS other key findings of the analysis present a more stark and sombre reality:
Confirmed fraud levels hide unknown truths
When compared with the previous year, the 7% reduction in the level of confirmed fraud recorded by CIFAS members in 2010 can be considered as good news.
Indeed, this drop in the level of fraud goes some way towards demonstrating the success of the preventative measures taken by businesses to foil fraudsters.
However, the decrease also raises very serious questions:
Determining the true extent of fraud
CIFAS is the UK’s Fraud Prevention Service, with over 260 member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and share dealing.
Members share information on identified frauds in the fight to prevent further fraud.
CIFAS’ head of communications, Kate Beddington-Brown, commented: “While any decrease in the level of confirmed fraud is good news, how much other fraud is being attempted remains far from clear. Fraud levels rose during the recession and, as the UK continues to edge its way out of it, fraud appears to have gone down.”
Beddington-Brown feels it’s “far too early” to know the true extent of fraud as further economic challenges are yet to emerge and are sure to have an impact.
In 2010, over 102,500 cases of identity fraud (where fraudsters use false identities or impersonate victims) were recorded by CIFAS members (a small increase from 2009). This means, however, that identity frauds comprise nearly 50% of all frauds recorded by CIFAS members in 2010!
As a result, the danger and impact of this kind of fraud is clear, particularly in light of the fact that 2009 witnessed a 32% increase in this fraud type when compared with 2008.
Pain of fraud spread further
More victims in 2010 demonstrates that the pain of fraud is spread further than before. Over 110,000 instances of victimisation were identified in 2010 (nearly 90,000 of whom are victims of impersonation, a 4.73% increase from 2009 levels), underlining the very real human impact of fraud.
Irrespective of how individuals became victims, these people suffer from the initial financial fall-out (as well as the time taken to rectify the damage and the impact upon their emotional well-being and sense of security).
Beddington-Brown added: “Victimisation was previously seen as something that could be quite targeted, with fraudsters abusing a victim’s identity repeatedly. Sadly, the reality is that some fraudsters are now far more indiscriminate.”
Sceptics often claim that fraud is a victimless crime with little real impact but, in reality, fraud is theft. Plain and simple. While it can be difficult to quantify the financial harm caused by fraud, when viewed in human terms the damage becomes starkly clear to everyone.
“The British Crime Survey 2009-2010 recorded over 75,000 robberies and muggings,” stressed Beddington-Brown. “The number of impersonations alone dwarfs this number, and should convince anybody that fraud is very far from being a victimless crime. It is not and never will be.”
Viewing decreases in fraud levels in a wider context
Previous figures from CIFAS have confirmed the intensification during previous years of facility takeover frauds (also known as ‘account takeover’, whereby a fraudster hijacks an individual’s account in order to ‘take over’ and control it).
Between 2007 and 2009, facility takeover fraud rose by over 250%. Therefore, a decrease of approximately 5% in 2010 from the previous year must be viewed in context.
“Whether it’s organised criminals obtaining people’s account numbers through online criminal forums, or unauthorised use of someone’s bank card over the telephone, account takeover fraud is clearly not a passing trend,” asserted Beddington-Brown.
“These figures show that account takeover is most definitely now a favoured method of obtaining funds on a fraudulent basis.”
Comment from the CIFAS CEO
CIFAS chief executive Peter Hurst has also made a statement on the latest survey results.
“Fraudsters adapt their methods in response to changes in the economy and technology, finding and exploiting any area of weakness that they can,” he said. “As a result, these 2010 fraud figures must not be viewed in isolation.”
Hurst believes any reduction in levels of fraud is good, but there’s a caveat. “How much more fraud remains concealed, only to be revealed during further changes in our economic climate, can only be estimated.”
The past few years, of course, have witnessed a real economic rollercoaster: from healthy lending figures through to credit crunch and recession, a few signs of recovery and then an uncertain future.
“This alone means that fraud figures must be viewed in context,” urged Hurst, “and doing so reveals the real truth: that fraud rates have surged in recent years.”
This proves, if any further proof were needed, that the more organisations in both the public and private sectors work together to prevent fraud by sharing information with one another, rather than reacting to it, the greater the chance of lessening its impact.
