Fraud: a growing problem

Welcome to this fraud-focused edition of e-news, at a time when, unfortunately, fraud continues to be a growing problem, rapidly expanding across international boundaries.

In challenging economic times like these, detecting and avoiding fraud can be an easy and cost effective way to maintain profits. Fraud continues to be hidden in bad debt, and our solutions can help detect and avoid fraud, increasing profits as a result.

The credit crunch is making life difficult for credit-hungry overindebted consumers, and they are being driven to fraud, with fraudulent first party applications rising by over 20% during 2007 (1) as a result. The credit crunch has also made lenders more circumspect and many organisations have revised their referral policy to take less fraud risk, resulting in a rise in the number of frauds identified at application time, which may have previously slipped through the net.

Consumers themselves, in the face of continual data breaches and high-profile press coverage, are now more aware of the impact of identity theft than ever before and are becoming ready to take control and ownership of their own identity. Over 1% of residents in the Baltic States have already had their personal data misused after using it on the internet. We call this ID Management, and you can read more about ideas around this topic elsewhere in this edition of e-news.

The pace and sophistication in the methods in which fraudsters continue finding new ways to attack is constantly increasing. An example of this is in the UK, new build mortgage fraud and telco subscription fraud via the hijacking of SMEs are the current vogue, and Chip and Pin has displaced fraud, with fraudsters moving to countries not yet protected by such technology, or to ‘card not present’ channels such as the internet. Account Takeover has also risen over 30% (2), as once a card with Chip and Pin has been acquired by the fraudster, the risk of being challenged at the till is almost zero.

We, at Experian, are reinforcing our focus to identify and develop better solutions for our clients and expand our expertise in the different sectors affected by fraud, including sub-prime finance, mortgage, asset finance and telecommunications.

"Fraud continues to be a growing problem, rapidly expanding across international boundaries..."

We are also expanding our authentication services to cover over 20 European countries, so we can give you confidence in who you are dealing with - whether you are lending consumers significant amounts of capital or providing them with age-restricted services.

I hope you enjoy and find useful the contents of this newsletter. Remember, the fraudsters are always striving to be one step ahead of us. By working together, and sharing techniques and data, we can hopefully keep one step ahead of them.

Nick Mothershaw

Director of Fraud and Identity Solutions

Decision Analytics

Experian

Sources: 1) APACS. 2) CIFAS

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