Current account fraud has rocketed over the last year, but scammers are using it as a gateway to worse crimes.
Current account fraud rocketed by 114% in 2015, according to new figures from credit agency Experian.
In January 2015 the fraud rate on current accounts was 73 in every 10,000 applications, but it had risen to 156 in every 10,000 by December.
This type of fraud is driven by identity theft, with criminals applying for a current account using someone else’s personal details. They then empty the overdraft and use the account as a ‘gateway’ to further fraud.
“Current account fraud really came to the fore in 2015, with identity thieves acting as the chief culprits,” says Nick Mothershaw at Experian. “The positive side to this is that these numbers represent detected and prevented fraud attempts, demonstrating the robustness of the protection systems in place for financial products.”
‘Front door’ for fraud
The huge rise in instances of current account fraud is down to identity thieves getting wiser, with many realising a current account is a good first step to bigger fraud.
After setting up a current account in someone else’s name it becomes far easier to apply for other products falsely such as loans and credit cards.
“A current account is essentially the front door to other financial products of more value and potentially the route to more serious high value fraud,” says Mothershaw. “More and more fraudsters are becoming aware of this, which is why we are seeing an increase in current account fraud.”
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Credit fraud on the rise
It isn’t just current account fraud that rose in 2015. Detected instances of credit card fraud also rose from 36 in 10,000 applications in January to 55 in 10,000 by December.
Insurance policy fraud also increased from 37 in every 10,000 applications at the start of 2015 to 68 by December.
These increases show that detection is improving, but more can be done.
“While it is clear that the systems are working, both companies and consumers need to remain vigilant to the evolving tactics of fraudsters which become more sophisticated with each passing day,” says Mothershaw.
The new fraud taskforce
The Home Office has announced that a new taskforce is being set up to tackle the increasing amount of fraud taking place.
The Joint Fraud Taskforce will include Financial Fraud Action UK, the City of London Police, National Crime Agency, Bank of England, fraud prevention agency Cifas and the CEOs of major banks.
“Fraud shames our financial system,” the home secretary, Teresa May MP said as she announced the taskforce. “It undermines the credibility of the economy, ruins businesses and causes untold distress to people of all walks of life. For too long, there has been too little understanding of the problem and too great a reluctance to take steps to tackle it.”
The taskforce will aim to speed up intelligence sharing between banks and the police and roll-out national training for bank staff to help them identify existing and potential fraud victims.
How to protect yourself
There are a number of steps you can take to help protect your identity from fraudsters.
- Shred or destroy any documents that contain personal information before you throw them away.
- Never give out personal information, account details, passwords or PIN numbers in response to cold calls or emails.
- Be careful what you share on networking websites. If your pet names or children’s names are out there, don’t use them as passwords.
- Register to vote at your current address. Fail to do so and thieves can use your previous address details to open credit accounts and run up debt in your name.
- Keep an eye on your post. If you are expecting an important document and it doesn’t arrive get on to the company fast in case it has been intercepted.
- If you move house redirect your mail using the Post Office’s service.
- Use secure, unique passwords for your online accounts and try to use as many different passwords as possible.
- Don’t store account names and passwords in your smartphone, either in email, as a note, or to ‘autocomplete’. If your phone is lost or stolen fraudsters will easily gain access to your accounts.
- Check your bank and credit card statements for any suspicious transactions.
- Regularly check your credit report. It lists your credit accounts and what you owe, so you can check for applications and spending that have nothing to do with you.
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