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Banking frauds

As found in fraud prevention body CIFAS’ recently published Fraudscape report, nearly 30per cent of the record number of frauds recorded by CIFAS members in 2011 targeted bank accounts. As the bank account is one of the most commonly held and important financial products an individual can have access to, this is unsurprising; but the 4per cent increase in fraud against bank accounts from 2010 to 2011 underlines the precarious financial circumstances facing individuals and businesses equally, according to CIFAS.



Identity crime 

The 4per cent rise in fraud against bank accounts in 2011 was largely driven by significant increases in the levels of identity related crimes. These frauds include identity fraud (a rise of nearly 35per cent), which includes the impersonation of an innocent victim, and facility or account takeover (a hike of over 42per cent): frauds committed by fraudsters who have obtained enough personal data and information about the account holder to hijack an identity or existing account successfully.

With 62per cent of all account takeover frauds and 74per cent of all identity frauds being perpetrated online in 2011, the importance of account log in details (most commonly usernames, email addresses and passwords) cannot be overestimated. Fraud abusing the identity details and bank account of a victim can have serious ramifications, most obviously the loss of funds immediately experienced by the victim.

CIFAS Communications Manager, Richard Hurley, says: “The ease of online banking is not something that anyone would wish to give up, but the convenience comes with a price attached. As the figures from 2011 demonstrate, the abuse of an innocent person’s identity details has been a major contributor to the surge in bank account fraud; and is often tied to other forms of fraud (for example, fraudulently withdrawing funds from one account into another and then transferring to a third). It is imperative, therefore, that individuals and businesses constantly review their practices and safety protocols, to ensure that they are completely up to date, when banking online.”


Abuse of account

The most prevalent fraud against bank accounts in 2011, however, was misuse of facility fraud: where the genuine account holder fraudulently uses his or her account. More than 41,000 misuse of bank account frauds were confirmed in 2011, with 63per cent of these frauds relating to the paying in of fraudulent cheques or electronic payments.

CIFAS has previously commented on the seriousness of the problem posed by ‘money mules’ (those who either willingly, or as a result of a scam, allow their bank accounts to be used to receive and make criminal payments); as the most misuse of bank account fraud bears all the hallmarks of this kind of activity. Organised criminals have long been known to target those who are short of money (such as students or the unemployed) and, in the current climate, it is perhaps unsurprising that some people’s financial uncertainty will be a driving factor in them allowing their bank accounts to be used in such a way, the body adds.

Similar motivations will also be driving many who have committed the same type of fraud, without operating as a ‘money mule’: for example, altering cheques that they pay into their account or knowingly withdrawing funds from an account in the knowledge that they will not clear (8per cent of all misuse of bank account frauds in 2011).


Warning from CIFAS

Richard Hurley says: “The bank account is best summed up as the one financial product most people would not consider being without. While the increases in identity related frauds and misuse of bank accounts are unsurprising, they must serve as a stark reminder. The loss of access experienced by a victim whose account has been hijacked, or the withdrawal of services experienced as a result of an individual knowingly and fraudulently using their account cannot be overestimated. Organisations must do all that they can to help their customers keep their accounts safe, and to help prevent fraud by individuals who might risk falling into temptation in these economically uncertain times. Individuals too must recognise that accounts will be targeted by fraudsters, that precautions are – therefore – essential, and that using their own account fraudulently can have serious consequences.”


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