Shock and Awe: NFA Fraud indicator puts fraud at £73bn

For those for you that have been tracking, the NFA’s last estimate was £38.4bn, but the rise is really buried in the detail and largely attributed to the NFA casting their net on UK PLC a little wider and completing more granular analysis.

Is the War on Fraud Being Won?

Two sets of industry statistics were published this week, with different and conflicting information:

BBC  quoted statistics from the UK Card Association that plastic fraud losses were down by 7% to £341m, attributed to 41% fall in fraudsters impersonating card holders. Whilst CIFAS reported increase in Account takeover up 18%, account misuse (first party fraud 13%) and identity theft 10%.

Fraud around every corner?

The latest round of industry statistics paints a bleak picture of UK fraud. CIFAS’s latest report identified a 9% growth in fraud, whilst also highlighting an 18% growth in account takeover related fraud, and 13% for misuse of facility fraud (first party fraud).

Card fraud increases 60 per cent in 18 months

ACI’s 2010 Global Card Fraud Survey has been making a splash in the media over the last few weeks. According to our research, approaching a third (29 per cent) of consumers across eight major economies have been victims of card fraud in the past five years. This is up from less than a fifth (18 per cent) in summer 2009.

Direct Debit Fraud at an All Time High

It is worthwhile remembering that there is actually more than one victim involved in Direct Debit fraud. The Paying Bank executes the payment against a fraudulent direct debit mandate, and the Collecting Bank receives the fraudulent payment, whose customer provides goods and services – for simplicity let's assume they are in fact legitimate in the first place.

The Rise of Third Party Fraud

First party fraud continues to be a challenge facing institutions and is, arguably, a necessary evil of doing business for institutions today. However, this also can prove problematic when also trying to balance regulatory and consumer pressure to treat customers fairly. Here the advantage tips in favour of the fraudster: how do institutions manage and treat a customer that they suspect of showing symptoms of first party fraud - fairly. Just look at some of the consumer web forums describing tales of woe where customers or credit applicants have negative registrations against their credit history – purportedly for account misuse or supplying false or misleading information. However, let’s not lose sight of the fact that dishonestly making a false representation is now recognised as a criminal offence under the Fraud Act 2006.

AML and the virtual trap

In today’s financial climate in which banks’ credibility has already taken a hit, any further reputational damage needs to be avoided at all costs. While financial institutions have come a long way in ensuring measures are in place to tackle money laundering, the class action taken against NatWest in the US by victims of a terrorist attack in Israel highlights how even conducting the correct due diligence can sometimes not be enough - leaving a bank’s name tarnished.