At the end of the third quarter of 2009, data provided by the 260 Member organisations of CIFAS - the UK's Fraud Prevention Service, proves that fraud continues its inexorable rise. They report:

• an 11% increase in the level of fraudulent activity,
• a 38% upturn in misuse of facility fraud (where an account, policy or other facility is used fraudulently) when compared with the same period in 2008,
• and the continuing scourge of identity fraud and facility takeover fraud.

(Numerical tables are included in the Notes for Editors below).

Fraud increases at worrying rate

In the first nine months of 2009, over 175,000 cases of confirmed fraud have been recorded by CIFAS Members - an increase of over 11% from the same period in 2008. Richard Hurley, CIFAS Communications Manager, notes: "The usual comment is that fraud rises during times of recession, and these figures serve depressingly to prove this assertion."

The continued growth of misuse of facility fraud

A 38% increase in misuse of facility fraud (for example, using a bank account to receive fraudulent payments) indicates that the recession is revealing a network of rogue transactions across the economy.

Over 50% of cases filed for misuse of facility fraud involved a bank account, with credit card accounts also proving to be popular products for fraudsters to misuse. The most frequent reason for filing cases as fraud is the use of an account to pay in false or altered cheques or bogus electronic funds transfers - which accounts for just short of 50% of cases. The deliberate evasion of payment makes up just over 1 in 5 cases.

These reasons - when viewed together - prove that it is the deliberate movement of funds to and from accounts that explain the majority of the increase in misuse of facility fraud; and that fraudsters exploit any means and products that they can, in order to achieve this.

Identity fraud and facility takeover fraud persist

As previously highlighted in The Anonymous Attacker, CIFAS Members have recorded figures that reveal the gloomy fraud landscape in the UK today. First, there is a 36% increase in the number of victims of impersonation. This is combined with a continued climb in facility takeover frauds (or account takeovers): 23% in the first three quarters of 2009 when compared with the same period in 2008 - and by a staggering 238% in the last 24 months. These are the types of fraud that most seriously affect innocent consumers: with the threat and impact of becoming a victim being continuous.

Part of a bigger picture

As previous CIFAS fraud trends releases have noted, patterns in fraudulent activity should never be viewed out of context. As the economic slowdown goes hand in hand with the rise in fraud, so can the increases in different types of fraud. Similar sized increases in the numbers of victims of impersonation (36%) and misuse of facility fraud (38%) go a long way to confirm this.

A marked change in fraud did occur towards the end of 2007, and throughout 2008, which proves that the impact of the recession is not merely a wild theory. Links between fraud and other criminal activities have also been long established, and the combination makes for an unsettling bigger picture.

Richard Hurley, CIFAS Communications Manager, explains: "These figures can partly be explained by the recession. As economic conditions constrict cash-flow, changes are seen in fraudulent behaviour and the overall level of fraud increases. What should not be forgotten, however, is that organised crime no longer strictly means syndicates of criminals with personal interaction. Organised crime can equally mean the sale of identity information online to an anonymous bidder, who then uses this information to impersonate an innocent victim and make fraudulent transfers into this account before withdrawing them - without the fear of being traced."

Comment from the CIFAS Chief Executive

Peter Hurst, CIFAS Chief Executive, warns: "Fraud is invariably linked to a swathe of other crimes and fraudulent transactions. Once a false account is set up, a wide variety of other frauds and the movement of illegally obtained money become possible. This criminal cash flow affects us all - individuals, businesses and the public sector alike. The need to stem the flow of fraudulent finance, therefore, is a shared responsibility with shared benefits - and one that we cannot afford to ignore."

Notes to Editors:

1. 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 is unique and was the first data sharing scheme of its type in the world.  Other schemes modelled on CIFAS have been set up in Southern Africa and Germany.

2.   The following tables show a summary of the statistics and the number of fraud cases recorded by CIFAS Members during the first nine months of 2009, broken down by the type of fraud identified.  Definitions are given below the table.

Fraud Cases Identified refers to each proven instance of fraud identified by CIFAS Members and filed to the CIFAS database.  Members must have sufficient evidence to take the case to the police although it is not mandatory that they do so.  A fraud case can involve multiple subjects and multiple addresses.

Financial Benefits.  This is the amount of money that Members of CIFAS reported that they have saved through being alerted to previous frauds by CIFAS warnings. 

Identity Fraud cases include cases of false identity and identity theft.

Application Fraud/False Insurance Claim relates to applications or claims with material falsehood (lies) or false supporting documentation where the name has not been identified as false.

Facility Takeover Fraud occurs where a person (the 'facility hijacker') unlawfully obtains access to details of the 'victim of takeover', namely an existing account holder or policy holder (or of an account or policy of a genuine customer or policy holder) and fraudulently operates the account or policy for his own (or someone else's) benefit.

Asset Conversion relates to the sale of assets subject to a credit agreement where the lender retained ownership of the asset (for example a car or a lorry).

Misuse of Facility is where an account, policy or other facility is used fraudulently.

3.  The Anonymous Attacker was released on 12 October 2009 and can be found online.