Bank account fraud highest level in 3 years

New research from Experian has found that bank account fraud has reached its highest level for more than three years.

The credit reporting company said that its analysis of data from the National Fraud Prevention Service uncovered an “alarming surge” in fraudulent activity targeting both British businesses and consumers.

The fraud rate for current accounts rose by 13 per cent in the second quarter of the year compared to the previous quarter. The number of bank account fraud cases was also up 24 per cent when compared to the same period of 2020.

Confirmed fraudulent openings for savings accounts rose by 170 per cent - the fraud rate now being three times the rate in the previous quarter and five times when compared to the same quarter last year.

Loan fraud rates jumped by 40 per cent during the same period, its highest reported level in the past three years, and up 63 per cent on the same period last year.

First-party fraud related to loans - where an individual gives false information or misrepresents their identity to access a product on more favourable terms - also rose by 18 per cent.

“Fraudsters assume opening a savings or current account is a relatively straight-forward process and then use them to receive and quickly distribute illegally-obtained funds, as well as giving them access to other financial services offered by the bank or building society they’ve selected,” said Eduardo Castro, head of identity and fraud, Experian UK&I. “Both consumers and businesses need to be made aware of the threat that scams pose. Our analysis serves as a warning that fraud prevention should be a priority for all organisations.”

But Experian said that the rise in rates could also be attributed to financial services’ fraud teams using a sophisticated combination of new technologies such as Machine Learning to successfully identify and prevent fraud.

“New technologies are helping firms to flag potentially fraudulent activity right at the beginning of the application and account opening process,” added the Experian executive. “Meanwhile, customers are becoming increasingly comfortable using sophisticated security methods such as physical biometrics and facial recognition, and pin codes sent to mobile devices to verify their identity.”

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