June 23, 2016
The latest Fraud Index from Experian showed that the overall fraud rate increased by 20% from Q1 2015 to Q1 2016 – from 45 in 10,000 to 54 in 10,000.
A worrisome trend seen in the numbers was a marked increase in identity theft within mortgage applications – so higher mortgage fraud numbers.
Mortgage fraud is when fraudsters misrepresent or omit information on a mortgage loan application in order to get a loan or a larger loan.
During the first quarter of 2016, the proportion of attempted mortgage fraud committed by identity thieves increased to 6%, the highest level since 2012. In the past, it has accounted for 4% of detected mortgage application fraud. While it doesn’t sound like a big increase, this kind of third party mortgage fraud is complex and not as easy to commit on a large scale as fraud related to financial products, according to a company fraud expert. Mortgage fraud can also be devastating for the victim. Fraudsters will hack databases or intercept emails between individuals and their solicitors – and divert (and steal) large payments to their own accounts.
There was also an increase seen in the number of fraudulent mortgage applications by criminals impersonating someone who had recently passed away.
Across the board, the Fraud Index showed that identity theft was the most prevalent form of fraud with 59% of all fraudulent activities attributed to third party fraud. Current account fraud was still the most frequent type with a rate of 126 in every 10,000 applications. Credit card fraud occurred at a rate of 46 in every 10,000 applications.
What can organizations do to lower their risk of fraud and identity theft?
Action Fraud, a UK-based fraud and cyber crime reporting centre identified four key areas that need safeguarding:
Customers: Safeguard against fraudsters by taking the time to assess all customers’ profiles and the transactions they are requesting. The most common customer fraud is abusing methods of payment for goods and services.
Employees: Create a culture of security in the workplace from the top down. Use workplace reminders about crimes such as phishing, insider fraudsters, social media behavior, etc. Schedule on-going security training for employees. Employees should never leave confidential information in full view or where it could be hacked.
Suppliers: Suppliers and third-parties are a concern. In a recent Ponemon survey, 70% of respondents say third party risk has increased significantly. The report showed that in the past 12 months, organizations spent an average of approximately $10 million to respond to security incidents as a result of negligent or malicious third parties. Verify the identity of suppliers and third parties, and make sure they are committed to information security.
Assets: Identity confidential information, understand privacy laws that relate to it, and protect your assets. Have a comprehensive Document Management process in place. Utilize IT safeguards, and keep applications and programs updated. Securely destroy information that is no longer needed. Introduce a Shred-it-all Policy, and partner with an information destruction services expert that provides secure shredding services for both paper documents and digital information.