Analysis of fraud trends during 2011 reveals a 9% increase in the overall level of fraud when compared with the previous year.

Other findings of the report from anti-fraud association CIFAS present a stark picture of the economic crime landscape in the UK:

•Over 236,500 frauds were identified during 2011 by CIFAS Members, the highest number of frauds ever recorded by CIFAS Members and over 120,000 individual cases with an identifiable victim.
•The continued blight of identity fraud accounts for over 113,000 fraud cases (a 10% increase from 2010 levels and representing 48% of all frauds).
•An 18% surge in facility takeover fraud (where a fraudster gains access and fraudulently uses a victim’s account such as a credit card, bank account or mobile phone), meaning that this type of fraud has rocketed by nearly 300% in just five years.
•A 13% rise in misuse of facility fraud (where an account, policy or other facility has been legitimately obtained but is later used fraudulently).

“It is vitally important to remember that fraud and economic crime are offences with a range of motivations,” says Richard Hurley of CIFAS says. “Many of these frauds will undoubtedly be committed by organised criminal elements, but many will also be committed by people who seemingly feel that their circumstances leave them no choice. Equally, financial desperation leaves many susceptible to potential scammers. Untangling the mess that fraud causes, irrespective of motivation, however, is time-consuming, damaging and costly to businesses, to the public sector and to individuals.”

The fraudulent use of identity details (either belonging to someone or fictitious) continues to pose the greatest threat, making up almost half of all frauds identified during 2011.

This is exacerbated when access to a person’s account details is gained and account details taken over, for instance via hacking, interception of post details, or through social media engineering. This type of fraud increased by 18% during 2011, which means that the two data driven frauds (identity fraud and account takeover combined) now account for over 58% of all frauds identified. Further, the number of victims of both types of fraud has – when combined – risen by 10% from the levels in 2010.

“The value of personal data to fraudsters has never been questioned, but the continued increases in the levels of identity fraud and account takeover warn us all that not enough is done to combat fraudsters. All organisations must recognise this threat, and review how they try to prevent such frauds: whether that is by reviewing their security procedures and increasing identification requirements when dealing with applications, or by ensuring that individuals regularly change passwords and PIN numbers,” says Hurley.

One of the most disconcerting fraud types, however, remains misuse of facility fraud: where a legitimately obtained account is used fraudulently (such as to receive stolen funds, or evade payment of monies owed). CIFAS has previously highlighted that a substantial proportion of such frauds bear the hallmarks of ‘money mule’ activity, demonstrating that organised criminals now have a three pronged attack: either impersonating them, hijacking their accounts or tricking them into using their own details as a shield.

“With the cost of living increasing, pay levels frozen for many, and tax and VAT changes taking effect, perhaps it is unsurprising that fraud has rocketed again,” comments CIFAS chief executive, Peter Hurst. “Not investing in proper fraud prevention systems and approaches, from online security to data sharing, is tantamount to leaving an open till unguarded. It is the same whether you are a private sector organisation, a public sector body or a charity.”

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