Fraud levels rise as UK enters recession

Monday, 26 January 2009 12:00

Fraud levels have shot up as the credit crunch bites, figures from fraud prevention agency CIFAS show.

Over 2008, fraud levels increased by 16 per cent, CIFAS found.

Facility takeover frauds - when a fraudster takes over a victim's bank, credit card or catalogue account - increased by 207 per cent.

These types of fraud are usually enacted through telephone, or email phishing scams or by intercepting credit cards and statements.

CIFAS head of communications, Kate Beddington-Brown, said: "We have seen fraudsters using this method increasingly during 2008, but the sheer scale of the increase is truly alarming.

"Fraudsters are clearly adapting to current conditions. They know that lending criteria have become more stringent as a result of the credit crunch, and that application fraud is likely to be unsuccessful."

CIFAS said there has also been a 69 per cent increase in 'misuse of facility', when fraudsters use a bank account to pay in false cheques or fraudulently obtained benefits.

And as more people are having real credit applications rejected as lenders tighten their criteria, identity theft is becoming less popular - instead, fraudsters are creating fake, but creditworthy, identities, CIFAS said.

Attempts to commit fraud by lying on application forms also remained high in 2008. The most frequent lie told remains the failure to disclose, when asked, a previous address where the applicant's credit or insurance history has been impaired, CIFAS said.

Peter Hurst, CIFAS chief executive, warned: "With Britain now in recession, a significant rise in fraud is inevitable, as people turn to crime to make ends meet. These figures are just the beginning. They also show very clearly that fraudsters adapt their methods in response to changes in the financial markets."

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