As consumers resorted to desperate measures to acquire new credit, the amount of people who commit fraud by lying on application forms for insurance products, loans and credit cards jumped in the first half of the year.
The fraud prevention agency, CIFAS, reported that the amount of discovered incidences of so-called “application fraud” rose by more than 12 per cent during the first half of 2008.The most popular lie, CIFAS said was not disclosing a previous address where a bad credit record had been built up by the applicant.
Since the beginning of the credit crunch, credit cards and new loans have become harder to obtain, especially for those people who have a poor credit history. As a result of the rising cost of food, fuel and housing however, some consumers have resorted to trying everything imaginable to acquire more money.
Peter Hurst, who is the Chief Executive of CIFAS, commented that consumers who lie on application forms in the belief that it will give them an advantage in obtaining credit have to realise that the opposite is true. CIFAS has more than 270 member organisations located within insurance, banking, retail credit, asset finance, telecommunications, credit cards, factoring and share dealing. Members share details of known frauds and can reference address histories of potential customers. In this way, lies are easily detected, applications are rejected and information is recorded. Telling the truth, therefore, is always the best policy.
“Facility takeover” fraud also saw a sharp increase in the first half of the year, rising by 157 per cent. This is the practice whereby fraudsters tap into someone’s accounts by impersonating them. Identity thieves steal specific elements of personal information, using it to take on your identity and commit crimes in your name. Not only does this include address, telephone and name details but also key data such as national insurance number, banking and credit card information , passport details and so forth. Fraudsters then edit this information and use it, amongst other things, to open new bank accounts and apply for loans.
While the implementation of chip and pin has aided the reduction of card fraud, CIFAS said that other kinds of fraud are now taking over. Mr Hurst acknowledged that credit has become more difficult to get hold of and, as a consequence, criminals are focusing on accounts that exist already. Ant-fraud departments and consumers alike are feeling the effects. As a result of the rise in the number of lies being told to obtain credit so too is there an increase in workload for those at the fraud prevention agency.
CIFAS holds offers courses which are aimed at helping people to identify and eliminate various types of application fraud. In addition, APACS, the UK payments association, led the field in developing a website, requested by the Home Office, to highlight identity theft. It gives consumers practical advice on how not to become a victim and what steps to take if this should happen. You can visit the site at www.identitytheft.org.uk