Current accounts fastest growing target for identity thieves

Third party current account fraud soars 20% in the last year.

Identity thieves are increasingly targeting current accounts, according to new figures from credit reference agency Experian.

Current account fraud by identity thieves has risen 20% within the past year and now accounts for almost half (47%) of all current account fraud.

Detected fraud on current account applications saw the largest annual rise of all financial products in the last year, from 49 frauds per 10,000 Q4 2013 to 60 per 10,000 cases in Q4 2014 – an increase of 19 fraud cases per 10,000.

What’s behind the rise?

Nick Mothershaw, UK&I Director of Identity & Fraud at Experian, says the Current Account Switch Service, which was introduced 18 months ago, may have something to do with the spike.

This service allows current account holders to switch accounts within seven working days. Mothershaw says the launch of the service may have prompted fraudsters to test application systems.

However, reassuringly at the same time more scrutiny into due diligence and back office procedures on anti-money laundering initiatives, as well as efforts around identity verification and stronger ‘Know Your Customer’ programmes, have been in put place by banks and building societies to toughen up defences.

Identity theft

Experian says the rise in current account fraud in the last year is reflective of a marked shift in the level of identity theft cases overall.

Identity theft incidents have risen 12% in the past year and now accounts for more than half (52%) of all detected frauds.

Detection has increased over the last year from 40 frauds per 10,000 cases to 50 frauds per 10,000 cases.

Mothershaw says more fraud is being spotted thanks to greater vigilance, diligence and determination in the financial services sector. But as more people access and apply for financial products across multiple channels, including online and mobile fraudsters, evolve accordingly.

Experian says the rise reflects a return to pre-downturn levels of identity theft when third party theft (i.e. when a victim’s identity is stolen) eclipsed first-party fraud (i.e. fraud carried out in person).

Detected first-party fraud, as a proportion of all frauds, has decreased from 60% of all fraud cases in Q4 2013 to 48% of fraud cases in Q4 2014.

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Other targets for fraud

Fraud on mortgage applications remains the highest of all financial products, but the rate has slipped from 87 frauds per 10,000 in Q4 2013 to 84 per 10,000 in Q4 2014.

Experian says mortgage products don’t tend to targeted by identity thieves but instead individuals trying to cheat the system. Almost nine in ten cases (88%) of mortgage fraud was down to a form of misrepresentation by the applicant on documents.

Mothershaw commented: “Stricter affordability tests, while playing a clear role in protecting individuals from unmanageable debt, have made the process of switching mortgages more complicated and lengthy. It may be possible that they are prompting some applicants to falsify their credit commitments, earnings, or job status."

Credit card fraud detection has also declined annually from 32 frauds detected per 10,000 cases in Q4 2013 to 30 cases per 10,000 in Q4 2014.

Credit cards remain the product most targeted by identity thieves but the figures have remained static in the last year.

How to avoid becoming a victim of identity theft

Experian advises five key steps to help avoid and protect against identity theft.

1. Always use secure, unique passwords for as many online accounts as possible, and ideally all of them. At the very least have a unique password for each type of service provider such as financial services, retails services and email.
2. Don’t be tempted to open emails and links or attachments received from people you don’t know. If an email seems suspicious, contact the relevant organisation and don’t give out personal details.
3. Don’t store account names and passwords on your smartphone, either in e-mail, as a note, or to ‘autocomplete’ when you open a website or app.  It will be goldmine for fraudsters if your device is lost or stolen.
4. Be cautious and don’t add people you don’t know on social media websites like Facebook. Remember what you might consider to be unimportant information like your birthday, email address or dog’s name could all be misused by criminals.
5. Monitor your bank and card statements and your credit report regularly – it will help you spot any suspicious activity as early as possible and avoid financial loss.

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