Safeguarding your business and clients from fraud
By Murdo McHardy, Hampden & Co
22 September 2020
More than ever, people and businesses need to be vigilant of scams and fraudulent activity.
CIFAS, the UK’s leading fraud prevention service, reported that a total of 364,643 cases of fraud were added to the National Fraud Database in 2019, an increase of 13% on 2018.
Back in March of this year, the National Crime Agency warned that instances of scamming and hacking would increase during the COVID-19 pandemic as more people worked remotely and spent time on their computers.
The Financial Conduct Authority recently announced they are investigating 165 cases of suspected scams which have been reported since the UK’s coronavirus lockdown began. These were cases where perpetrators used phone calls, emails, text messages, letters and social media to target clients and companies, indicating the extent to which financial services companies and banks have been targeted by criminals during the pandemic. In one instance, fraudsters pretended to be from HMRC and targeted company owners seeking COVID-19 relief grants to help manage their finances throughout the crisis.
In their latest Fraudscape report, CIFAS noted the different types of fraud and some startling statistics.
Identity fraud
Identity fraud, where criminals use another person’s information to steal money or commit crime, is the most common type of fraud, accounting for 61% of all cases recorded to the National Fraud Database in 2019. A particular target for fraudsters has been plastic cards and bank accounts. 87% of the cases were committed online and more than half of these requests were granted before the fraud was even detected.
Facility takeover
This is when a fraudster poses as a genuine customer to gain control of an account to make unauthorised transactions. For example, this could be a bank, credit card, retail shop, email or other service provider. These accounts are normally taken over as a result of phishing, spyware or malware scams.
There were nearly 32,000 cases of facility takeover recorded in 2019, a 34% increase compared to 2018. A large number of the victims were aged between 41-50 years old, a 43% increase for this age group.
Application fraud or misuse of facility
Application fraud is when an individual uses their own name to apply for a financial product but uses counterfeit documents or false information in their application. Similarly, misuse of facility is when a person opens an account with the intention of using it for fraudulent purposes, for example, taking out a credit card without planning to make repayments. These types of fraud may be carried out by individuals under their own name, or by someone who has stolen their identity.
There were just under 84,000 cases of misuse of facility recorded in 2019, up 2% on 2018. Bank accounts were particularly targeted, followed by online retail accounts where almost all the fraud related to evasion of payment.
Internal fraud
432 individuals were recorded for internal fraud in 2019 - up 13% compared to 2018, with the main cases involving dishonest actions by staff and employment application fraud.
The need for awareness and for businesses and experts to collaborate on action has never been greater.
Watch our on demand webinar on safeguarding your business and clients from fraud
At Hampden & Co, our personal approach to banking helps us to protect our clients and to identify transaction requests from fraudsters. Mike Betts, Head of Learning and Counter Fraud Studies at CIFAS, discusses current trends and threats, and provides practical steps that you and your business can take to deter, detect and prevent fraud.