The Fraud Report

April 2011

Contents

1. 2. 3. 4. 5. 6.

Executive summary Introduction Key fraud trends Profiling the first-party fraudsters Victims of fraud Fighting fraud in a multi-channel world

page 3 page 4 page 5 page 10 page 14 page 17

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1. Executive summary
Fraud in the UK is a growing billion-pound illegal business with fraudsters
resorting to innovation and inventiveness, targeting any perceived weaknesses in the system deceptions becoming ever more ingenious

New Experian analysis reveals that fraud rates are rising fast and the 20 in every 10,000 applications for credit and other financial services made in
2010 were unearthed as fraudulent an 11 per cent rise on 2009

More than half of fraud is now down to first parties where an individual
misrepresents their personal circumstances to secure credit or other financial services

Over 90 per cent of first-party fraud cases involve some form of data massage The economic climate has fuelled a mortgage and automotive fraud boom. Pay
freezes, job cuts and business closures are likely to have contributed to the rise in first-party fraud

The biggest fraud culprits are in the lowest income groups, however, there

are also higher-than-average incidents of fraud amongst young, professional, university educated people

Mortgage fraud was up by 13 per cent to 32 in every 10,000 applications in 2010 Automotive fraud rates also saw a big leap. 38 in every 10,000 applications for
car finance were discovered to be fraudulent in 2010, up 31 per cent on 2009 fraud challenge

The Insurance sector continues to face a stressed-consumer first-party Non-disclosure remains a major cause for concern, but both home and car

cover providers continue to wrestle with staged accidents or incidents. Evidence has also emerged of third-party identity fraudsters operating at the claims stage increasingly sophisticated

Identity fraud remains a significant threat, with attacks becoming With identity verification, fraud prevention tools and tighter controls making
it increasingly tough to garner fraudulent credit, fraudsters are increasingly looking to open bank current accounts as a gateway to the more lucrative prize of credit cards and loans alongside those living in shared and rented accommodation

The wealthiest sections of society continue to be targeted most frequently, London is the identity fraud capital of the UK. However, there is evidence

to show that identity fraudsters are migrating westwards and increasingly targeting residents of commuter towns, including Reading, High Wycombe and Basingstoke

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2. Introduction
Nick Mothershaw, Director of Identity and Fraud, Experian

Fraud, be it individuals misrepresenting their own circumstances to obtain services that would otherwise be out-of-reach, or the more sinister threat of identity fraudsters masquerading as someone else, continues to be a major cause for concern amongst the credit and wider financial services community. At Experian the data, technology and expertise we provide is helping many leading organisations across a wide range of sectors to protect their reputations and bottom lines. Fighting fraud is a challenge we relish at Experian, and the data, technology and expertise we provide is helping many leading organisations across a wide range of sectors to protect their reputations and bottom lines. For organisations providing finance and goods on credit, or a wider range of financial services, the requirement for robust fraud defences should be a fundamental part of their corporate DNA. Organisations across these sectors have become increasingly sophisticated in how they combat fraud, with robust tools to verify the identities of those they are dealing with, strong measures at the point of application and innovative analytics to monitor for signs of organised fraud, account takeover or other suspicious activity within their open account base. The journey does not stop however. The fraud threat continues to evolve and adapt, targeting any perceived weaknesses in the system. Organisations, therefore, need to continue enhancing their procedures for validating and verifying identities, and ensure that their fraud prevention and detection tools are best in class. They key, however, is to provide (and enhance) the defences consumers expect as standard while at the same time ensuring that they can access your business on their terms and at their convenience. Drop-offs due to complicated and intrusive fraud defences mean lost business. Consumers will select providers that make their lives as easy as possible, while still making them feel safe and protected. This report provides an overview of how fraud changed in 2010, the key trends affecting the credit and wider financial services industry now, and some of the steps it should take to ensure it can achieve robust defences with an optimum customer experience in the future.

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3. Key fraud trends

In the UK there is a multi-billion pound industry that has thrived throughout the recession and its aftermath. Unfortunately it is the business of committing fraud. New Experian analysis of information from the National Hunter anti-fraud data sharing system and its Insurance Hunter database, detailed in this report, reveals that fraud rates are rising fast and the deceptions becoming ever more devious. Key findings are: A significant rise in first-party fraud, driven by economic pressures Identity fraudsters seeking to open current accounts as de facto Trojan horses to target credit products Insurers continue to face a first-party fraud challenge and identity fraudsters operating in this sector are becoming more elaborate The trend is clear: 20 in every 10,000 applications for credit and other financial services made in 2010 were unearthed as fraudulent an 11 per cent rise on the 18 in 10,000 recorded in 2009. The thrust of this is down to first-party fraud up from 39 per cent in 2009 to 56 per cent in 2010 where an individual paints a knowingly false portrait of their personal circumstances in an attempt to secure credit or other financial services. Over 90 per cent of first-party fraud cases recorded in 2010 involved some form of misrepresentation of personal information Yet the menace of third-party identity fraudsters has not subsided; in fact, it has turned to ever-greater stealth, with bank current accounts targeted as a gateway to the more lucrative prize of credit cards and loans. Economic climate fuels mortgage and automotive fraud boom Fraud has not been immune to fallout from the recession and its aftermath. As pay freezes, job cuts and business closures hit peoples pockets hard in many parts of the country, so their perception of prosperity changes. This has fuelled aspects of fraud and changed its character, with a rise in first-party fraud from certain parts of society in particular from those described by Experians Mosaic classification as: Liberal Opinions, young, professional people who have benefited from a university education a group that would have previously shunned such behaviour Upper Floor Living, typically young singles living on limited incomes, renting small flats from local councils or housing associations Terraced Melting Pot, young people with few qualifications working in relatively menial occupations

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Figure 1: Annual fraud rates by product type

Product Automotive finance Credit card Frauds per 10,000 applications Change on previous year Frauds per 10,000 applications Change on previous year Current account Insurance Frauds per 10,000 applications Change on previous year Frauds per 10,000 applications Change on previous year Loan Frauds per 10,000 applications Change on previous year Mortgage Frauds per 10,000 applications Change on previous year Savings account Frauds per 10,000 applications Change on previous year 2006 25 45 2 11 15 2007 21 -15% 29 -36% 5 +195% 9 -18% 18 +17% 2008 32 +54% 21 -26% 9 +57% 7 -23% 26 +46% 2009 29 -11% 19 -12% 18 9 +9% 5 -33% 28 +6% 23 2010 38 +31% 19 +4% 23 +25% 9 -5% 7 -57% 32 +13% 7 -68%

Source: Experian, National Hunter and Insurance Hunter

While lower income groups are more generally associated with these types of fraud, it is being increasingly committed by atypical groups of people; their likely motive, during economic adversity that is pressurising their finances on all sides, is that their behaviour is only a sense of bending the system. It is possible that those perpetrating these frauds do not consider this activity to be a crime. Whatever their actions today, it is possible that many of these part-time fraudsters feel that theyll be able to pay it back at some point. For example, their failure to include a former address at which they incurred a negative credit history wont incur any guilt or sense of embarrassment, rather a sense of entitlement. The wider impact of these actions is not seen or considered, despite estimates from the Association of British Insurers that insurance fraud adds an extra 44 to the average households annual insurance bill1. Mortgage fraud, up by 13 per cent to 32 in every 10,000 applications (it was 28 in every 10,000 in 2009) underlines this impact. First-party fraud made up 97 per cent of mortgage fraud last year (ticking up from 93 per cent in 2009), and in the vast majority of cases, individuals either inflated the prospects or status of their employment and personal finances, or attempted to conceal a patchy or poor credit history. This high number was also bolstered by self-certificated mortgage lending rule changes that impacted self-employed borrowers without the requisite number of years accounts as proof of creditworthiness. Faced with a choice of no loan, a less competitive rate or a more affordable mortgage via misrepresentation of job status, many choose the latter.

Source: ABI, 29-Dec-10: http://www.abi.org.uk/Media/Releases/2010/12/Home_cheat_home_.aspx

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Automotive fraud rates also saw a big leap. 38 in every 10,000 applications for car finance were discovered to be fraudulent in 2010, up 31 per cent on the year before. This increase was higher than for any other type of finance, although it is likely that the increase the number of genuine applications brought about by the Government scrappage scheme in place throughout most of 2009 minimised fraud rates for the year and inflated the year-on-year change in Experians fraud index. More than 80 per cent of automotive fraud is first-party, with more than half motivated by a desire to conceal adverse credit histories, and theres a new threat on the block in the guise of corporate identity theft, whereby individuals try to pass themselves off as being associated with a legitimate company in a bid to obtain trade finance. Third-party identity fraudsters returning to cards and loans The prominence of first-party fraud might appear to overshadow the more traditional third-party element of identity criminality, yet the bread and butter target of old-fashioned credit card and loan identity fraud is resolutely still in fashion. Experian data suggests that identity fraudsters are increasingly deploying stealth tactics to do so: opening a current account as a spring board to dive into other products offered by the same financial institutions e.g. overdraft, credit cards, loans or even using it as collateral to tempt other banks or building societies. The current account has come into its own, with fraudsters targeting it as a Trojan horse into financial services companies, as identity verification, fraud prevention tools and tighter credit controls make it increasingly tough to garner fraudulent credit. Controls for current accounts have not, historically, tended to be as tight as mainstream credit products because the risk of financial loss is much lower. Because of this, fraudsters see current accounts as an easier target than credit products. They attempt to inveigle their way into a bank account, win trust with seemingly genuine behaviour timely payments and account management, for instance and then use these established relationships in an attempt to exploit offers of overdrafts, credit cards and loans. It is also a case for concern that some current accounts are being opened as a simple laundering service acting as a front for fraudsters to channel in money illegally made from fraudulently obtained card and loans; by transferring it to a genuine current account, they can then release the cash without the usual difficulties of gaining access to stolen money. Although the data for current account analysis only stretches back to the second quarter of 2009, our report finds a 25 per cent rise in fraud approximately 40 per cent of current account fraud is down to third-party activity. And worryingly, as part of this rise, a small but stubborn number (roughly two per cent) of these frauds stem from elaborate ruse by tenants who claim to own properties they rent in order to boost their chances of securing a credit facility. Almost nine per cent of identity frauds attempted in 2010 involved false residential or owner/occupier status. However, it is not only current accounts in the firing line. Mortgage providers too express anxieties at third-party organised criminal gangs running complex and obscure fraud rings. Notwithstanding the (thankfully) fewer cases, as it takes a great deal of time, labour and resources to devise such projects, exposure to loss on each case can be huge.

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The greatest problems emerge when a professional party a solicitor, broker or even member of staff within a lender is part of the deception. Uncovering such fraud can cause huge headaches for all parties, given the skills of each profession and their capacity to easily hide the data within high volume turnover. Actual third-party credit card fraud figures stabilised at 19 in every 10,000 applications in 2010 having dropped every year since 2006 and accounted for more than 80 per cent of card frauds, with mail interception to glean personal details the most common method. By contrast, after three similar consecutive years in which fraud rates fell, fraud rates for personal loans shot back up, with seven in every 10,000 loan applications flagged as fraudulent, up from five in 2009. This was in part due to the general trend of a rise in first-party fraud; with personal loans, the numbers hiding a less than robust credit history by omitting a previous address during an application swelled to 30 per cent - a doubling. However, identity fraudsters were still responsible for the vast bulk approximately 60 per cent of loan fraud attempts last year and, as with cards, using current address fraud as the preferred point of attack.

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Insurance sector face stressed consumer first-party fraud challenge The insurance industry also has a fraud challenge to meet, as it continues to be targeted by financially stressed and struggling consumers. Despite frauds attempted against insurers staying fairly stable at nine in every 10,000 applications, for the third year running first-party fraudsters made up more than 90 per cent of those detected at policy application stage for both home and motor insurance. In each, the problem of non-disclosure remains a major cause but both home and car cover continue to wrestle with the serious issues of staged accidents or incidents. At the claims stage for home insurance, more than a quarter (27 per cent) of fraud cases uncovered involved staged incidents typically a faked burglary; items added to a list of genuinely stolen goods; or electrical goods accidentally dropped in order to claim new for old while a further 20 per cent were multiple claims with conflicting evidence. Non-disclosure made up almost 80 per cent of cases in 2010. For motor insurance, the figures make for equally sobering reading. Non-disclosure of previous motoring claims accounted for more than a third (34 per cent); convictions (14 per cent); and fronting where a parent or older, lower-risk friend is named as the main driver but never drives counted for eight per cent; and staged accidents some seven per cent. Worryingly for insurers, evidence has also emerged of a third-party fraudster at the claims stage. More than a fifth (21 per cent) of fraudulent motor insurance claims involved staged accidents where critically the fraudster then attempted to claim on insurance policies previously obtained using someone elses identity.

Figure 2: Quarterly fraud rates by product type

Source: Experian, National Hunter and Insurance Hunter

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4. Profiling the first-party fraudsters

More than half of fraud is now down to first parties where an individual wilfully and often artfully misrepresents their personal circumstances to secure credit or other financial services otherwise out of their reach. This is a major shift in trend, from 39 per cent in 2009 to 56 per cent in 2010, and while certain culpable groups fit an expected profile of who might typically be drawn to commit fraud throws up an intriguing new picture where certain segments of society are engaged in an illegal activity in which few would be quick to categorise them. The biggest fraud culprits emerged from the demographic known by Experians Mosaic classification as Upper Floor Living. Typically on limited incomes, renting small flats from local councils or housing associations, many live among neighbours suffering severe unemployment or sickness that exerts a huge negative impact on their quality of life. A common problem is poor access to consumer credit because of patchy credit histories. Obtaining affordable insurance is also a struggle. In such adverse circumstances, fraud might be considered as a relatively easy way to bypass such hurdles, with the fact that it is a criminal offence often overlooked due to the victim being a large organisation rather than a person.

Figure 3: Propensity to commit first-party fraud in 2010

Mosaic Group Upper Floor Living Liberal Opinions Terraced Melting Pot New Homemakers Claimant Cultures Suburban Mindsets Alpha Territory Careers and Kids Ex-Council Community Industrial Heritage Rural Solitude Professional Rewards Small Town Diversity Elderly Needs Active Retirement All 383 170 157 144 111 97 78 76 73 58 47 42 40 29 26 Automotive 271 185 309 157 140 76 36 53 78 51 26 19 36 29 27 Credit card 240 215 315 153 77 90 52 93 41 51 51 20 31 32 27 Current account 124 161 165 192 65 124 124 129 56 70 76 78 56 43 12 Loan 213 217 290 154 97 80 30 79 69 79 46 22 30 47 10 Mortgages 128 133 245 121 63 134 163 114 63 60 84 89 45 18 29 Insurance 73 86 218 95 115 143 173 86 108 85 58 86 73 30 35

Source: Experian, National Hunter and Insurance Hunter

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Figure 4:Top ten first-party fraud hotspots

Town/territory East Ham Stratford Hounslow Woolwich Ilford Walthamstow Birmingham Central Slough Ealing Broadway Harrow 2010: Attempts per 10,000 adults 29.33 14.45 13.22 12.93 11.78 10.28 10.27 9.86 9.68 8.84 2009: Attempts per 10,000 adults 7.03 3.57 3.61 6.16 4.84 3.55 5.02 2.95 3.07 2.85 Year-on-year change +317% +305% +266% +110% +143% +190% +104% +234% +215% +210%

Source: Experian, National Hunter and Insurance Hunter

Another group profile bearing limited income and opportunities that also scored high, attempting first-party fraud at nearly twice the national average rate in 2010, is Terraced Melting Pot. As its name suggests, this is a hotch-potch of lower-income workers, minorities and recent immigrants who tend to sport few qualifications and are often employed in menial or routine jobs. The surprise in the first-party fraudster profiles is the Liberal Opinions demographic. This group ranks as the second biggest fraud perpetrators overall relative to its size. It contains plenty of young, professional people with a university background whose careers cover politics, entertainment, the arts, design, university education and the web, those in this group have much to lose from complicity in fraud. Its high ranking suggests how a post-credit-crunch environment and fearful reaction to recessionary forces can propel some relatively well-off people into crime, in a bid to possibly either maintain a lifestyle gained in the less adverse economic climate or solve growing financial problems caused by todays greater pressure.

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Figure 5: First-party fraud rates by region

Town/territory Greater London North West West Midlands Yorkshire & Humber South East East Midlands Wales Scotland East Anglia North South West Northern Ireland 2010: Attempts per 10,000 adults 7.45 3.05 2.90 2.48 2.35 2.16 2.03 2.00 1.97 1.92 1.49 0.74 2009: Attempts per 10,000 adults 2.71 1.61 1.43 1.14 1.03 1.06 0.87 1.06 0.68 0.93 0.78 0.71 Year-on-year change 175% 90% 103% 117% 128% 105% 134% 88% 191% 107% 92% 4%

Source: Experian, National Hunter and Insurance Hunter

Figure 6: First- v third-party (identity) fraud risk by Mosaic Group in 2010

450 400 350 300 250 200 150 100 50 0
Alpha Territory Ex-Council Community Industrial heritage Small Town Diversity Suburban Mindsets Claiment Cultures Liberal Opinions New Homemakers Careers and Kids Professional Rewards Terraced Melting Pot Upper Floor Living Active Retirement Rural Solitude Elderly Needs

Propensity to commit first-party fraud

Risk of being targeted by identity fraudsters

Source: Experian, National Hunter and Insurance Hunter

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This insecurity is perhaps significantly underscored by above average attempts at Automotive, Mortgage and Insurance fraud committed by Alpha Territory types, those at the apex of wealth and power with very high incomes. When desire or need to commit fraud rises this high up social strata, the impact of economic forces on crime look very clear. Geographical analysis reveals that Londoners attempt more first-party fraud than residents of the rest of the UK. There were seven first-party fraud attempts for every 10,000 adults in Greater London during 2010, more than twice the rate recorded in the next busiest region for first-party fraud, the North West of England. East Ham was the busiest UK town/territory for first-party fraud in 2010, experiencing 30 attempts for every 10,000 adult residents. This was double the rate of Stratford, the next busiest area. Hounslow, Woolwich, Ilford and Walthamstow also averaged more than 10 attempts for every 10,000 adults. Outside of London only Birmingham Central could match this level of firstparty fraud activity.

Figure 7: First-party fraud map of the UK 2010

Source: Experian, National Hunter and Insurance Hunter

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5. Victims of fraud

Who are the most tempting targets in identity fraudsters crosshairs?

Those who live in shared or rented accommodation (greater exposure to attack) Those with a generous chunk of disposable income (juicy rewards) Individuals whose general affluence makes them a key overall target

With an overall identity fraud risk score of 301, AlphaTerritory group members were three times more likely to be targeted than average in 2010. Containing many of the most wealthy and influential people in Britain, as their often visible wealth and ability to access substantial credit lines mark them out as significant targets for the organised criminal element. In particular, they are marked out as the most likely to be targeted for loan fraud, being targeted at almost eight times the average rate. The second most at risk demographic in 2010 was Liberal Opinions, a well-heeled group of young professionals whose dependence on the internet and tendency to live in shared accommodation and smart rented flats, many of which experience a rapid turnover of tenants, exposes them and their personal information to a wide range of opportunistic and criminal fraudsters. With a risk score of 208, those in this segment were targeted at twice the overall rate. Figure 8: Risk of being targeted as by identity fraudsters in 2010
Mosaic Group Alpha Territory Liberal Opinions Upper Floor Living Terraced Melting Pot New Homemakers Professional Rewards Careers and Kids Suburban Mindsets Rural Solitude Small Town Diversity Industrial Heritage Ex-Council Community Active Retirement Claimant Cultures Elderly Needs All 301 208 175 138 135 121 93 92 57 50 49 45 40 34 24 Automotive 281 186 242 190 147 111 83 77 60 26 41 49 27 49 22 Credit card 224 240 150 118 161 104 90 89 52 64 56 48 62 32 32 Current account 217 136 186 82 130 93 233 17 44 88 130 44 44 186 0 Loan 770 127 103 108 93 85 116 112 70 43 70 32 12 27 12 Mortgages 179 284 195 343 43 62 66 125 0 0 68 29 0 49 0 Insurance 34 114 256 240 122 59 21 172 82 0 81 111 0 117 20

Source: Experian, National Hunter and Insurance Hunter

Risk scores compare the volume of frauds registered against a group with the size of its population to indicate their propensity to attempt first-party fraud, or to be targeted as a victim of third-party / identity fraud. Each score can be compared to a national average of 100.
2

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Figure 9:Top ten identity fraud hotspots

Town/territory Woolwich East Ham Victoria Street Lewisham Cheapside Reading Ilford Tooting High Wycombe Stratford 2010: Attempts per 10,000 adults 17.03 16.07 14.22 13.56 10.57 9.87 9.68 9.41 9.36 9.08 2009: Attempts per 10,000 adults 23.70 20.14 12.65 16.37 9.84 3.30 9.85 7.05 6.10 10.75 Year-on-year change -28% -20% +12% -17% +7% +199% -2% +33% +53% -16%

Source: Experian, National Hunter and Insurance Hunter

Conspicuous alongside these more affluent groups was the Upper Floor Living demographic, typically young, single people on limited incomes, renting small flats from local councils or housing associations.This group has become a more popular target over recent years as some fraudsters have sought to perpetrate higher volumes of low value frauds as a way of attempting to circumnavigate increasingly sophisticated fraud defences. For security against identity fraud, the safest are those who that use the internet least, tend not to access credit and whose circumstances make them less accessible to fraudsters.The Active Retirement group, those over 65 who have made a deliberate attempt to distance themselves from the noise, diversity and disorder of large cities, and Elderly Needs, large numbers of pensioners that can no longer engage in the level of physical activity that younger retired people take for granted. In particular, the reliance of the Elderly Needs demographic on sheltered accommodation and nursing homes makes them extremely difficult to be targeted, although Experian is aware of cases in which such groups have been deliberately targeted by a carer because of this. London continues to be the identity fraud capital of the UK, with residents three times more likely to be targeted than the national average. Seven in every 10,000 Londoners were targeted by identity fraudsters in 2010, down very slightly on 2009 levels. The problem was most acute inWoolwich and East Ham, which despite attempts falling by more than 20 per cent year-on-year still saw identity frauds targeted against more than 15 in every 10,000 residents. There is, however, evidence to show that identity fraudsters are migrating westwards out of London and increasingly targeting residents of commuter towns.The number of identity frauds attempted against residents of Reading, trebled in 2010 to more than nine in every 10,000 residents, catapulting it into the UKs top ten hotspots for the first time. Similar levels of identity fraud activity were recorded in HighWycombe and Basingstoke, the latter seeing attempts increase 281 per cent year-on-year.

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Figure 10: Identity fraud rates by region

Town/territory Greater London South East West Midlands North West East Midlands Yorkshire & Humber Scotland South West Wales East Anglia North Northern Ireland 2010: Attempts per 10,000 adults 7.20 3.02 1.66 1.47 1.39 1.36 1.13 1.12 0.90 0.89 0.87 0.52 2009: Attempts per 10,000 adults 7.92 3.39 1.72 1.96 1.45 1.56 1.27 1.38 0.88 1.17 0.94 0.58 Year-on-year change -9% -11% -3% -25% -4% -13% -11% -19% +3% -24% -7% -10%

Source: Experian, National Hunter and Insurance Hunter

Figure 11: Identity fraud map of the UK 2010

Source: Experian, National Hunter and Insurance Hunter

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6. Fighting fraud in a multi-channel world

The criminally-minded seek to stealthily siphon ever more millions of pounds from financial institutions and other organisations. They prefer to do it quickly, quietly and choose not to discriminate. While this report has focused on the impact of fraud on large financial service and insurance providers, it should be noted that it doesnt matter how big or small the company is or what the industry is, fraudsters are out to find an underhand way into corporate finances and make off with the money. As customer numbers and orders rise, particularly online where increasing numbers of companies will only ever interact with their customers via the internet, never has the need to confirm genuine identity been more pressing. Failure to properly identify fraud in a business can also lead to a compliance minefield; clear inability to protect customers is a swift way to incur regulatory wrath. The corollary is clear: organisations that keep a tight lid on fraudsters will keep a tighter grip on their bottom line. But meeting this challenge is not easy identifying fraud, monitoring it and then curbing its impact on business is a full-time endeavour. As a critical starting point, there are three key elements of fraud that client companies need to ensure they can manage: identity validation; its verification; and the actual fraud itself. The first covers the critical essence of fraud: is this person or entity for example, a related application, bank account or telephone number genuine and do they actually exist? Secondly, is a given or specific piece of information applicable to the relevant individual? Third, on the overall fraud, how confidently can a company rely upon every last scrap of information that it has at its disposal? It is perilously easy to be swamped by an overload of such data that, without installing efficient anti-fraud systems, continues to leave you exposed, regardless your industry sector. Within banking, the crucial aspect of identity verification is compliance across the whole gamut of multi-channel deliveries: the internet, telephone services, branches, as well as for bad debt management and customer acquisitions. In the public sector, its salience is a different story here success stems from stymieing mass benefit fraud and working towards a valuable shared intelligence between local authority and government departments. At one end, for example, it can check the veracity of an alleged single person claiming a council tax discount for living alone and at the other, verify passport details and authenticity vital in the battle to prevent terrorism.

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Separately, telecoms and utility companies need anti-fraud techniques to hedge against the loss of expensive items such as expensive smartphones or laptops that are often given out upfront to customers. And in the burgeoning online gaming industry, identity verification is essential for compliance with strict rules on age; when the customer cant be physically seen, its imperative to ensure they meet age requirements while at the same time making sure such rules dont act as a commercial deterrent to genuine customers. Yet these basic essential ground strokes against fraud are only the beginning: using identity verification with customers, particularly online as part of fraud prevention, can bring a welter of other benefits. Confirming proof of identity is an often tortuous task for customers during an application for goods or services. In all too many cases, a poor customer experience can cause frustration and ultimately lead to lost business, as an individual loses patience with a cumbersome and time-consuming identity check and abandons the process. However, efficient identity verification is able to turn this into a swift and comparably painless task that critically prevents consumers from losing heart, and leads to greater volume of customer acquisitions. It can also vastly boost online operational efficacy, with speedy set up of customer payment systems allowing faster flow of funds into the business, and permit more painless regulatory compliance. This has been underlined by Experians own recent experiences with identity verification and fraud prevention across a range of blue-chip clients and industry sectors. In banking, a promotion run by one UK building society to boost applications to savings accounts tempted plenty of interest but only one in ten of those lured to the site were being converted into customers. However, after the introduction of a new online identity verification process that did away with much of the laborious fraud testing, the number of conversions rose to 40 per cent as time taken to pass through the identity checks fell to just eight minutes. A similar solution at a large high-street retailer helped to dramatically improve its online purchase success rate. By deploying a series of out-of-wallet identity verification questions that made use of information that only the genuine individual would know, the former hurdles of documentation requests were made redundant upping successful conversion rate. It can also transform client companies operational efficiency; reducing the cost of staff time spent rectifying basic mistakes.

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Customers setting up payments with a banking group were running into an administrative quicksand when either they or staff were keying in the wrong information and sparking a huge rise in account referrals. After a switch to a new payment validation procedure, the number of referrals dropped by nearly a third. And committing resources to the fight against fraud can also be hugely beneficial if youre a new entrant to a market. Fraudsters often believe fresh faces to a particular industry segment are more vulnerable to attack than existing players because they wont be as vigilant as others. However, Experian has provided a relative newcomer to the UKs retail banking sector with a panoply of identity verification products that allow the client to ensure fraud is kept to a minimum as it rolls out new financial deals in a bid to capture hundreds of thousands of new customers.

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